Time to batten down the hatches

While they are advocates of the Euro and supportive of the austerity measures, they have however announced that they wish to re-negotiate the terms and to stretch out the pain period to four years. What that means is that they are kicking the can down the road and the issue of “in or out” will have to be faced in two or three month’s time.

As far as the rest of Europe is concerned, uncertainty remains high on the agenda. The bad news is only marginally less bad. Spain (we are not in trouble, but could you lend us E1000bn to tidy us over), Portugal, Italy and Cyprus remain in a financial swamp with banks in trouble and sovereign debt rising. Northern Europe is slipping into recession or hovering just near it with no panacea in sight. Expect 2012 European Union GPD growth to be near zero and probably even lower in 2013.

The consumer is concerned and is therefore spending less. We are seeing this in the import flows, with North Europe volumes down over 2% in January-April 2012 vs the same period in 2011.

The North Europe Global Port Tracker produced by Hackett Associates and ISL is projecting that the six North Range ports will end the year with a 2.4% inbound increase over 2011 (viz 8.2% last year) and outbound flows increasing by 5.2% year on year vs 7.9% last year. Asian exports, according to CTS, in Q1 2012 are up 5% on Q1 2011 but with a downward trend over the last six months.

With all the terminal expansion and investments that are taking place around the world, there will be a lot of competition to fill the berths and a lot of stress with carriers to fill their giant containerships. The coming 12 months are going to be tough for all concerned in the industry.