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Drewry: Container market has “bottomed out”

Drewry: Container market has “bottomed out”

Drewry: Container market has “bottomed out”

   Drewry Shipping Consultants said last week the container market has “bottomed out.”

   “We do expect global traffic to recover a little in the second half of 2009. And we should see some minor recovery in trade flows for 2010, up by around 2.4 percent,” said Neil Dekker, editor of the London-based consultant’s just-released Annual Container Market Review & Forecast, 2009-2010. “Freight rates have been improving on a number of routes recently but these trends have been counter-cyclical. We are also projecting that average all-in east/west rates will climb encouragingly by around 18 percent next year.”

   “However, whatever the measure, any improvement needs to be set against serious overcapacity. Although orders for newbuilds have been stagnant for 12 months, there are still far too many ships coming on stream over the next few years,” he added.

Dekker

   Figures from another consulting firm, AXS-Alphaliner, show the container fleet is scheduled to increase in capacity by 8.7 percent this year, 12.1 percent in 2010, 10.5 percent in 2011 and 5.9 percent in 2012.

   “Part of the solution lies in the various parties taking collective responsibility for the overcapacity, and working together to limit the effect,” Drewry said.

   'Carriers, owners, shippers, terminal operators, yards and banks need to work through this crisis together because all are now inextricably linked, having formed complex relationships concerning, in particular, credit and contractual lines for the financing and delivery of a huge backlog of ships,” Dekker said. “This, apart from the recent decline in global container traffic, is at the very heart of the situation the industry faces.

   'Additionally, many ports have invested heavily in new terminals based on the expected surge of cargo on ever larger post-Panamax tonnage, and neither the ships nor the terminals facilities and extra capacity will be needed for several years,” he said.” Our view is still that all parties remain at threat and it will be a test of their resolve to adapt and to share some of the financial stress and responsibility for their mutual protection.'

   Drewry said, “Some ocean carriers have effectively micromanaged supply at the individual trade route level and, since July this year, there have been positive signs of increased container flows and freight rates on certain key routes. To achieve this, services have been canceled, vessels have been cascaded and effective capacity switched into laid-up or off-hired inactive capacity. Moving all the chairs around like this is not addressing the problem and is only a temporary solution.”