Too much, too soon
I’d like to share with you some wise words that appeared in the latest Container Intelligence Quarterly from Clarksons.
“While the outlook for the market balance in 2010 looks marginally brighter, the legacy of contracting trade growth in 2009 means that global box trade volumes are unlikely to get back to pre-recession levels until at least 2011.
“Although much reduced fleet growth expectations, coupled with a gradual recovery in trade, means that there is potential for the balance between supply and demand growth to steady in 2010, this is unlikely to be enough to make up for the huge trade deficit left over from the global crisis, and it may take a number of years for trade volumes to get back to pre-recession levels.
“Additionally,” Clarksons warns, “if volumes do return, and freight rate restorations continue to be successful, this positive impetus to the market comes with the added threat of reactivating too soon the significant proportion of the fleet still idle. It is likely that market players will continue to feel the negative effects of the downturn for quite some time.”
Sobering words, and ones that have an added significance when considered against a background of the recent spate of announcements regarding the start-up of new or re-start of old Asia-Europe liner services in two short weeks last month. We saw the new container line, The Container Company (TCC) unveil its intention to enter the Asia/North Europe trade in late April; CSAV Norasia announce that it will enter the Asia-West Med trade in mid-March, Evergreen, Hyundai Merchant Marine and UASC declare that the first westbound sailing on its new Asia/East Mediterranean service will start on May 17 from Qingdao; and Wan Hai and PIL confirm the re-launch of their Asia/Europe service – the FES service – with the first westbound sailing from Shanghai scheduled for March 13.
Too much too soon? Quite possibly, and particularly with other similar plans in the pipeline.
Clarksons estimates that global container trade dropped by an unprecedented 9.7% in 2009 to 123m teu, the first decline on record. It considers a slow recovery is now underway and forecasts 5.2% growth this year to 129.4m teu. This, however, is a figure that is still significantly below the 136.2m teu volume carried in the liner trades in the peak year of 2008.