Only the beginning of the end

Yet when we look at the volumes that arrived on the West Coast US ports in January, they were little changed from December. What was there to prepare for? And in any case, there were enough economic signals that things had moved into an upswing.

Europe saw an increase in volumes from Asia of 2.5%, month-on-month and a 21% decline on the backhaul. Comparing the statistics with January 2009 gives a completely false picture of growth.

What does all this mean? Essentially that the industry has not really changed all that much. We are seeing a return of carriers that had left the trades as the financial debacle built up and shippers complaining profusely that freight rates are going up, almost ignoring that they had reached uneconomic levels and that carriers remain fixed on strict capacity management. It all adds up to freight contract negotiations.

In the meantime, the terminal operators are not as sanguine as they have been in the past. Money is scarce or non-existent for investments, and we are beginning to see a move to “lay up” terminal capacity as excess capacity has become the norm. Not so long ago the papers were filled with doom and gloom about lack of capacity.

The industry needs to find a long term strategy that bridges the short term and the medium to long term needs of the carriers and the shippers. The annual contract negotiations combined with the boom and bust of shipbuilding combine to create an economic environment that can hardly be found in any other industry. The ending of the liner block exemption certainly has brought more transparency but it also brought a certain level of confusion as it came just as the economic crisis hit.

As carriers get beyond the stage of survival, perhaps we will see longer term contracts that allow for better planning of resources.