Hamburg Sud president warns worse is yet to come

HAMBURG SUD president Ottmar Gast is warning the container shipping industry to brace itself for much worse to come amid this unprecedented crisis in the container shipping industry sparked by the current economic downturn.

During a visit to the German company's largest transhipment hub, Cartagena, Mr Gast said there was little relief on the horizon for the ocean liners. Carriers are faced with volume declines averaging 20 per cent on last year and 30 per cent compared with their forecasts for the current year, he was quoted as saying in the report.

The situation posed an enormous challenge for the maritime industry, including shipping companies, yards, ship financing banks, ground transportation service providers, ports and terminals.

The worldwide economy is in a situation that we have never had since the Second World War and it is no surprise that the most global industry is suffering so much, he said.

Even if the economy will come back it will take some time before the balance between supply and demand is in order again, he said.

It is absolutely unserious to make any kind of prediction because the situation is so unique, he said. Anybody that says 'no I believe that in the middle of this year or the beginning of next year [things will come back]' is just speculating because it is not comparable with anything before that we have a crisis that affects, more or less, all regions.

The World Trade Organisation has recently forecast a fall of 9 per cent in global trade for this year.

Mr Gast said Central America and Colombia were suffering less at the hands of the global slump but the country's import-export volumes are still down 10 per cent, according to another Hamburg Sud executive.

At the moment I think it is difficult to think about any acquisitions because everybody has to struggle to get the situation under control, said Mr Gast. Even if you would look for opportunity at the moment you can only acquire maybe heavy loss-making or even negative cash flow companies then you would buy negative cash flow which doesn't make any sense.

Operating 116 containerships, Hamburg Sud has not put any of its vessels into cold lay up yet, instead preferring to restructure its service pattern on almost all of its main routes to bring supply into line with demand and slash costs, with the reduction of capacity on important trade lanes and by replacing smaller vessels with bigger ships offering lower slot costs where possible.

Source: Schednet