A bad dose of post-holiday blues
The economic malaise of the European Union could drag down ports further in 2012. Credit - Xavier Häpe
Never let it be said that economists are an optimistic bunch; we have a tendency to look for the downside in statistics, looking for reasons to scale things back to suggest that there is worse to come.
There are of course exceptions to all rules.
As we ended what should have been a second good year wringing our hands, buffeted by the economic malaise of the European Union, the sputtering economic recovery in the US and the slowing down of growth and exports in Asia, we are looking at 2012 and thinking that there might be worse to come.
As some of you may have guessed from previous musings about the global economy, I lean towards the Keynesian approach to economic policy. If you are in a recession or just coming out of one, the last thing that the economy needs is a policy that chokes off growth. Yet this is exactly what has happened in Europe and to a large extent in the US.
The greater the austerity, the greater the GDP decline (Greece and Ireland are good examples).
We are now faced with declining demand for bulk commodities, stagnant container volumes to the US and declining container volumes to Europe. Exports from Asia are being hit as a result.
Shipowners, operators and chartering companies are already suffering. The ports, having had two good years, will be next in line to feel the pressure as growth becomes but a dream.
There is also a major shift taking place in the container sector. We may finally see some consolidation and common sense as Maersk, CMA CMG/MSC, G6 and a realigned CKYH creating four super groupings that suggest that there is little room for the individually operating carriers.
We should expect to see at least two or three names disappearing as the year progresses and maybe an increase of scrapping of the superfluous 4,000 to 5,000 teu ships.
Financially, the industry will be challenged this year as banks have no interest in lending when there is overcapacity in almost all the sectors. Speculative owners may well exit the markets as well. There have been better times.
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