Underinvestment in developing world ports exacerbating container downturn

Describing the container shipping sector as “going into reverse”, Drewry’s Annual Container Market Review and Forecast 2008/09 portrays a market increasingly influenced by sentiment, as well as economics.

“Sentiment is now playing a big factor in the industry; barely twelve months ago carriers were making record profits in the Asia-Europe trade but from summer 2008, freight rates on the headhaul market have plummeted and appear to still be in decline,” said Neil Dekker, editor of the report.

“Generally, with the supply/demand balance weakening, the management of capacity will become crucial for carriers over the short and medium terms. Cascading of ships to smaller trades will be a key focus for carriers in the next 18 months and the laying up of tonnage is not out of the question.”
Mr Dekker further points to a “lack of improvement of port infrastructure in developing markets” which has created bottlenecks and increased congestion.

But in spite of the apparent negatives, Drewry’s report also points to strong growth on US backhaul trades to north Europe, the Mediterranean and Asia, which has helped reduce container imbalances and re-positioning costs.