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It
is a sign of the depth of the crisis facing many
of the world’s container shipping lines that
traffic figures released last week by Neptune
Orient Lines showing traffic during June down
only 14 percent on the previous year were
greeted as modestly good news.
For the first six
months of the year, the operator of the world’s
fifth-largest container ship fleet and one of
the most conservatively-run container carriers,
had reported volumes down 35 percent on the year
before.
However, while there are signs that demand for
container lines’ services may be falling less
sharply than before, that will do little to
prevent further lines having to seek the kind of
short-term cash injection Hapag-Lloyd was
yesterday seeking from its share-holders. Demand
is picking up partly because lines have been
forced to drop their charges for shipping each
container to levels that come nowhere close to
covering their operating costs.
They
are also suffering from the sheer duration of
the industry’s crisis. The long period of rates
too low to cover costs means the industry is at
risk of losing an aggregate $20bn this year on
turnover of about $180bn, according to Mark
Page, director of liner shipping at London-based
Drewry Shipping Consultants. “Whether or not
market conditions are becoming worse, lines’
problems are becoming cumulatively worse,” Mr
Page says. The sheer supply of ships is set to
remain a severe problem over the next few years,
even if the world economy recovers.
According to figures from Paris-based
consultancy AXS-Alphaliner, ship deliveries are
set to increase the world container ship fleet
capacity by an average 11.5 percent in each of
the next three years, in a market where demand
will this year probably shrink by more than 10
percent. Such figures lead Page to suggest that
2010 could be even worse than this year for an
industry which, since it started in 1956, had
previously experienced only one year - 2001 - of
volume declines against the previous year.
The
declines now being experienced are the first in
the industry’s history on
the key Asia-Europe route. “The fleet is
programmed to be increased by more than 10
percent next year, so the supply-demand gap is
going to get bigger again. It cannot possibly
start to narrow until 2011-12.”
The
grim figures mean that conversation in Hamburg,
home not only to Hapag-Lloyd but to many of the
world’s biggest container ship-owning companies,
is increasingly turning to which container
shipping lines might collapse and default on
their obligations to the owners, who are paid
charter fees for providing the ships.
The
speculation is mostly that either powerful, rich
owners or concerned governments will come to the
rescue. Hapag-Lloyd itself is expected to
request €1bn in guarantees from the German
government as part of €1.75bn in medium-term
financing it is seeking.
Source: Financial Times | 
