I love writing optimistic commentaries for The Journal of Commerce. The only problem is realizing how terribly wrong I have been over the past two years. Despite my poor track record, let’s try again.
We’ll focus on the two most important changes we expect to see in the project logistics sector: the market and freight rates.
The slow thaw in major capital project commitments will continue, and we expect to see the upturn primarily affect the Middle East, with a strong emphasis on Saudi Arabia. We’ll also witness unparalleled project development in Australia and the adjacent region. Despite some of the highest labor rates in the world, Australasia project activity, and forward-looking commitments, seem virtually bullet proof.
We expect the U.S. Export Import Bank’s aggressive loan-guarantee policies to benefit U.S. project forwarders as the export market for capital equipment is driven upward.
Although the pace of new project green lights remain slower than most observers predicted last year, we see some major work moving into the commitment stagem and I think we’ll see an upturn in breakbulk freight volumes by the third or fourth quarter of 2012.
That brings us to freight rates. We believe continued weak demand for non-project containerized cargo combined with increased capacity levels driven by new ship deliveries will result in soft container freight pricing this year.
The traditional project breakbulk market will remain cut-throat, and project shippers will enjoy lower rates. Shippers, however, should plan to face the prospect of rapid rate increases as volume inevitably rises.