Sunday, August 9, 2009

Container Forecaster predicts 10.3% contraction this year

Drewry Shipping Consultants’ latest Container Forecaster analysis has predicted a 10.3% contraction in the global container industry this year, to be followed by a mere 1% growth next year. For one of the most competitive trade routes – Asia-Europe, three years of demand growth have been wiped out, according to the report.

Drewry predicts that global container handling this year would be 27 million 20-foot equivalent unit, less than in 2007. This in itself is also bad news for the port investment sector.

The Drewry global/supply demand index, one of the industry’s key measures, is set at 83.4 for this year, falling to 79.6 in 2010.

Container Forecaster editor Neil Dekker said: “While our numbers are estimates, for example, the price of oil for the rest of 2009 is not easy to forecast, our analysis shows that the container sector is looking at a US$20bil black hole.”

“So we can expect more casualties and we believe that the industry will change as companies either go bust, amalgamate or shrink, shedding assets and personnel in the process… hardly a positive if it means experienced personnel will be leaving the industry,” he said in a statement.

One of the interesting facets of the current container situation is that business leaders seem to have conflicting views with one or two predicting recovery soon whilst others are not so sure.

Dekker said as independent advisers, Drewry was in a position to talk to carriers, shipowners and shippers.

The reality was that few, if any, of the actions carried out by the carriers to move away from the current abyss made sense, he reckons, adding that some business leaders privately agreed that strategies to protect market share and volume as opposed to revenue were suicidal.

“For Drewry, that acid test will be whether, in 10 years’ time, the industry will have learned the lessons from the downturn and follow business models that protect profits rather than risk-taking expansion and market share,” he said.

According to Container Forecaster, the business model of some of the smaller operators is proof that companies could operate profitably and are quietly expanding.

Larger companies, rather than bemoan the vagaries of an unforgiving market, needed to focus on sustainable solutions and try and resist the temptation for looking over their shoulders at market share, it said.

A big task, perhaps, given that market share has been the over-riding mindset for 40 years, it noted.

Launching new services in the hope for a summer peak might be short sighted and even illogical since it would put even more pressure on the current rate restoration initiatives going on in many key trades, it said, adding that selling vessels might reduce the strain for individual fleets, but the overall fleet size, and therefore the problem, remained.

Source: StarBiz

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