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Container Shipping Outlook

A Potential Outlook for Container Shipping for the Port Authority of New York and New Jersey


Background

It is recognised that the global economy is once again moving towards a cyclical downturn, which in turn affects international shipping and container shipping in particular.  Since 1982 there have been four significant downturns in container shipping where growth has not exceeded 6%.  These were 1982, 1985, 1998 and 2001 with the worst being in 2001. However, a growth of 4.1% was still recorded during 2001 and the industry rebounded the following year with an 11.2% growth and double digit growth has continued to 2007 apart from 2005 and 2006 where growth was 9.4% and 8.8% respectively.

Over the years there has been continual growth and this growth is expected to continue albeit it on a continuing cyclical basis which will be driven by distinct events.  This has been the nature of the container shipping industry and we have witnessed varying degrees of peaks and troughs of volumes over the years.

Container shipping is primarily used to move consumer goods so the goods will continue to move around the world where companies continue to outsource manufacturing where the manpower and material costs are cheapest.  The advent and development of containerization has allowed them to do this by significantly reducing the cost of international transportation over the years.  What does affect container shipping is the discretionary spending that is always one of the first casualties of economic downturns but this has never taken the global container shipping market into negative growth.

An indication of the current downturn is the estimates for global private consumption which grew at 11% in 2007. Initial estimates for 2008 indicate a growth of 2-4% and according to some publications this rate of growth may well last through 2009. 

Looking at the previous 20 years the estimated global container trade has grown considerably over this period as can be seen from the numbers in outline in Table 1 below.  Taking these numbers the movement of containers has been doubling every 6-7 years on average.  These figures are based on a global basis and it should be remembered that the growth of the various trade lanes that make up the global market vary considerably, but it gives a very good general indication of the state of the container shipping market over the past 20 years.

Over this period there have been various causes for the varying growth rates in container traffic with the principal causes being related to the global economic cycles that occur from time to time.  |However, it should be remembered that even in the worst downturn in 2001, growth was still 4.1% and there was a swift rebound the following year.


(September 15,2008)

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