A fine mess
The news that France and Germany are officially out ofrecession should be music to the ears of box terminal operators. A growth ingross domestic product – albeit a subdued 0.3% one – in both countries in the secondquarter should herald the start of the uptick, bringing with it increased consumerdemand for those end-user products so at home travelling around the world incontainers. Or should it?
While any movement in the economy should be a bellwether for the next move for box trades, it is becoming increasingly apparent that the container trades are in far too deep for a trifling fractional positive movement in GDP to make any difference at all. And worse, this situation is not the fault of Joe Public’s container terminal; the blame lies squarely on the shoulders of its customer, the shipping line.
Too much supply – read ships – is the now universally acknowledged culprit for the bleak situation that we now find ourselves in. As demand starts to pick up in line with economic growth this nevertheless does not represent a march towards market stability again. Offsetting this positive factor is the continuing introduction of new container tonnage. While it’s been 11 months since the last containership order, the forward picture regarding the introduction of new container tonnage can only be seen as devastating. Fifty per cent of the current capacity of the world containership fleet is set to be introduced in the near term with two thirds of this specified for 2009/10 delivery.
Frankly now is the time to decouple any good news in the economy with the rebirth of the container trades. While the economy in Europe at least appears to be on the path to recovery, container operations are still lost in the forest – for them, that path is still elusive.
We keep looking for green shoots, but what we really need to see is some determined action on the part of shipping lines – running ships as loss leaders to re-position empties doesn’t help anyone: it’s a band-aid for a fracture.
For sure, this action won’t come as a result of industry wide action. It is more likely to be as a result of factors such as industry consolidation and possibly even industry restructuring as a result of new market entrants able to enter the sector at low cost. One thing is for sure, and as the recently published financial results of key shipping lines indicate, we can’t carry on like this. Container shipping is now the weak link in the intermodal chain.
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