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Shipping Lines Not Out Of The Woods

      By: Ryan Gills

One of the best barometers of the health of the worldwide economy has always been the state of the shipping industry.That's because it offers an instant snapshot of the volume of international trade. And at turbulent times such as the world has experienced during 2008 and 2009, the sentiment expressed by the shippers reflects the experiences of people on a worldwide scale.

So the views expressed by the head of the world's biggest container shipping company, that the industry is facing a continued struggle following a year of business falls, show that economies still have troubled waters to navigate. One industry expert suggested that the container shipping industry's leading players made cumulative losses of between USD 20billion and 30billion in 2009.

Laying-up of ships and the consequent lack of work for crews wasn't the major issue, he said. Rather, it was that the rates shippers could afford to charge for what business remained plummeted, and were showing little sign of picking themselves up off the floor. They had seen falls of up to 30 per cent by mid-2009, and despite steady rises from their low point, and many experts are still expecting his company to report around USD 2billion losses for the year.

It was also suggested that prices were not yet at levels where shipping lines could make on ongoing profit, which meant that there was a realistic prospect of shipping rates rising further. While container traffic from the major countries in the western world was suffering, this was partially offset by growth in the likes of the Chinese and Indian markets, and this was helping to sustain their traffic levels.

However, it had not prevented traffic levels from falling. The situation in turn was worsened by drops in the prices of many major commodities which have, however, since, been largely reversed. Maersk's fleet of 500 container ships had temporarily been reduced by about 20 as trade volumes had dropped in the year.

Other economy measures, such as extending sailing schedules to achieve fuel savings and relocating to more modest offices, had also helped the company cope with the downturn, he added, and concluded that a tough outlook was being relieved by the fact that prospects were starting to improve for the end of the year.

And while no immediate turnaround was looking likely, experts are guardedly confident that his company would be well-placed to take advantage when it did materialize.

Article Source: http://www.dollarchurn.com/articles

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