Drewry paints bleak picture

During the last quarter of 2008, carriers have been doing their best to reduce capacity through suspension of a number of high profile east/west services. However, Drewry argues that the gap between supply and demand is still too big. For the short to medium term, carriers can at best only stabilise freight rates that, on the Asia to Europe trade, have recently fallen to uncommercial levels.

Drewry forecasts a meagre growth of 2.8% for 2009, and notes previous long-held industry rules have changed or become skewed, with freight rates being determined by factors other than simply falling demand. Further, carriers and alliances are seeking vessel-sharing or service sharing agreements they would not have contemplated 12 months ago.

Supply/demand index forecasts are expecting to fall by 7% this year and by a further 3.6% in 2010.

The consultant also expects that though the lay up of ships is a last course of action for the industry, it will become more of a feature throughout 2009.