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Global Container Trade |
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Table 1 |
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1 - Container Trade |
2 - Port Moves |
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|
m TEU |
m TEU |
|
1987 |
33.58 |
67.16 |
|
1988 |
37.02 |
74.03 |
|
1990 |
43.07 |
86.14 |
|
1991 |
47.68 |
95.35 |
|
1992 |
52.19 |
104.37 |
|
1993 |
57.30 |
114.61 |
|
1994 |
64.76 |
129.51 |
|
1995 |
72.11 |
144.22 |
|
1996 |
78.33 |
156.65 |
|
1997 |
87.41 |
174.81 |
|
1998 |
94.94 |
189.89 |
|
1999 |
104.35 |
208.70 |
|
2000 |
116.75 |
233.49 |
|
2001 |
121.79 |
243.58 |
|
2002 |
137.10 |
274.20 |
|
2003 |
155.00 |
310.00 |
|
2004 |
177.11 |
354.22 |
|
2005 |
195.54 |
391.08 |
|
2006 |
214.50 |
429.00 |
|
2007 |
238.67 |
477.35 |
|
1 |
All demand including empties and feeder legs | |
|
2 |
Moves across quays incl. empties | |
Source: Ocean Shipping Consultants
Chart 1
Source: Ocean Shipping Consultants
Shipping Lines
Business for the shipping lines tends to be more cyclical due to the number of issues they face from time to time. The periodic decline in volume growth due to global economic circumstances beyond their control is only one of the issues that shipping lines have to contend with over the years. The industry in general also faces periodic issues that affect them directly such as overcapacity, rising costs and falling income.
What is clear as we enter this current phase of economic downturn is that there are various other influencing factors at play that have either not come together before or are unique combinations of events thus creating an unusual set of events for the container shipping industry. An example of this is that during the last downturn in 2001, the price of oil was around $20 per barrel as opposed to in excess of $100 per barrel today.
Much has been written about the current global financial markets and the sub-prime loans, the subsequent credit crunch and the potential for inflationary pressures. This will also impact container shipping as consumer confidence declines resulting in less expenditure on consumer goods which is the one of the mainstays of container shipping volumes. However, apart from the global economic situation the other factors in play that will affect the container shipping lines at this particular time are:
There has been a considerable increase in the containership orderbook particularly in the 10,000+ TEU size of vessel. This is creating considerable overcapacity which will have a downward effect on the freight rates which will affect the income of the shipping lines.
With the end of the Liner Conference system there will be less discipline when it comes to maintaining tariff rates and controlling additional surcharges such as bunker and currency adjustment factors. If there is a lack of discipline it will result in a further downward pressure on the tariff rates which will further reduce the lines earnings.
Fuels costs have spiralled with fuel costs running to $125,000 per day for a 10,000+ TEU vessels based on the price of oil at $120 per barrel. Again this severely impacts the shipping lines bottom line even although there has been some recovery through Bunker Adjustment Factors (BAF).
The cost of new buildings is also increasing due to the continuing increase in the cost of steel which adds considerably to capital costs.
We are therefore entering a period where container shipping companies are facing multiple issues that will affect them to quite an extent and to summarise these are:
Overcapacity
Rising operational costs
Increasing capital costs
Uncertain financial markets which could affect borrowing
Falling volumes
(September 15,2008)
