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Container Shipping Outlook

Summary

The current situation we are in is one of tight credit markets, falling property values and high energy and other costs therefore inflationary pressures, which has led to declining consumer confidence so consumers are buying less. 

This has translated into falling container volumes at a time when shipping lines face over capacity, rising fuel costs, higher capital costs and pressure on freight rates with no structure in place to protect tariffs.

The container shipping industry is a cyclical business and we are in another downturn, with the question being this time around as to the depth and length of the downturn due to the extraordinary number of events taking place that influence the market at this time.

As we live in a consumer society, my view is that consumer confidence will return as it has in the past and that as this particular downturn ends the overall growth in global container shipping will continue.  In the past global container growth has rebounded relatively quickly from these periodic downturns, but instead of rebounding the following year as it has in the recent downturns this particular one may last somewhat longer, possibly until 2010 according to some views.

For future planning purposes I would therefore continue to assume there will be ongoing growth in the global container shipping markets and therefore the basic long term question for PANYNJ is how they see their future position in the US container shipping market with the more immediate question being the implications of the cascade effect as larger vessels are introduced into the Atlantic trades.

Sources:     Ocean Shipping Consultants

         The Economist

         Financial Times

         Containerisation International                                                   

Bill Burns - August 2008


(September 15,2008)

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