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THE outlook for the container shipping sector in 2010 is said to remain cautious, despite economic indicators pointing to a recovery in the world economy next year, according to analyst reports surveyed by Reuters.
A combination of factors including uncertainty over the pace of world economic recovery, weak freight rates, poor demand on all trade lanes, particularly on the key east-west trades, and the continuing growth of the world idle box fleet are expected to hinder the recovery of the shipping industry in 2010, which has experienced unprecedented lows.
Analysts expect freight rates to remain under pressure across the whole shipping sector including the dry bulk market, Reuters reports.
Reuters cited London-based shipbroker Clarksons as forecasting that container volumes will contract by 8.3 per cent this year versus growth of 4.8 per cent in 2008.
"Every player within the box shipping market is feeling the crunch in one way or another," Clarksons said in a report this month.
London-based shipping consultancy Drewry predicts the world container trade will increase by one per cent in 2010, while Washington-based forecaster IHS Global Insight anticipates growth of 6.8 per cent next year.
"It is not as if trade in 2010 will rebound to the levels we saw globally during 2006 or 2007 during the strong world recovery from the last global recession in 2001," said HIS Global Insight managing director Paul Bingham.
The report noted that Drewry's global supply demand index, a key measure of the container industry, is expected to hit an all-time low this year of 83.4. A figure above 100 indicates a strong market. However, the index is anticipated to fall to 79.6 in 2010 versus 100.1 in 2008 and 105 in 2007.
On the other hand, container shipping lines hope the traditionally busy peak period that normally begins in August in the lead up to Christmas, will be better than last year's recession-shortened season, but it is not expected to see the same volumes as two years ago, when the market was booming.
This is compounded by an Alphaliner report that first quarter revenues of 11 of the main container shipping companies had decreased by 35 per cent in the first quarter of 2009, compared to the same period last year, to US$14.45 billion.
Alphaliner was quoted as saying in the report: "Further revenue reductions are expected for the rest of the year and liner operators could face a $40-$50 billion combined revenue shortfall for 2009 versus 2008, much larger than that currently predicted by analysts."
Furthermore, the growing number of idle vessels is expected to place additional pressure on carriers' profitability in spite of their cost-cutting measures and attempts to delay vessel deliveries.
"There's going to be some fall-out," added Neil Dekker with Drewry. "There is no way that all companies can continue with those sorts of losses."
(Source: http://www.schednet.com)
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