PS Opinion Piece

There is no doubt that container shipping is heading into an extremely tough era and the big questions are how long will it last and who won’t survive? One of the answers that has been wheeled out a lot when it comes to assessing how long will it last is that the industry will try and conduct damage limitation through cancelling newbuildings. It is interesting to note in this context, however, the recent remarks of a senior Bureau Veritas executive who stated that as yet his organisation had seen little evidence of cancellation of newbuildings. Undoubtedly this will come but perhaps not in as large numbers as anticipated in some circles.

As to who won’t survive, the consensus appears to be it is too early to say yet but as well as some niche and smaller players there are expected to be some big casualties. Further, it is expected that one man’s poison will be another man’s meat and that out of the ashes of some of the casualties will arise some sizable new players – taking advantage of the ability to pick up modern vessels quite cheaply.

For container terminals the current situation also poses some interesting challenges – notably handling reduced volumes and thereby experiencing reduced revenues. This will be especially distinct in port ranges where there is a choice of terminals to call at, i.e. revenues will also reduce as a result of increased competition.

It is really only the exclusive gateway terminals who will be able to easily maintain handling charge levels and even so this does not mean that they won’t be under pressure from lines to prices. As one senior terminal executive said recently, “when the lines are doing well and putting more volume your way they insist on discounts but when the volumes fall they say ‘you have got to help us’ and still insist on discounts.”