The “perfect storm” to which I referred in last year’s Annual Review and Outlook has, unfortunately, arrived with emphasis. Global markets are shrinking, and shipping volumes are dropping dramatically, just when the huge increase in capacity from carriers’ vessel-building programs is arriving.
The huge imbalance of supply and demand will have the predictable impact on rate levels, which are already cratering in some trades. Fuel costs were on a roller-coaster in 2008, and while lower now, one should plan for continued instability in future years. And the industry is inexorably losing the last vestiges of its global antitrust immunity structure, just when carrier collaborative action could be most helpful.
2009 will likely bring carrier bankruptcies, including a few Top 20 blockbusters, and industry consolidation, premised more on opportunistic takeover of assets of failing companies than on strategic development of global services.
In the long run, perhaps a very long run, the self-correcting actions of the market will bring us back, and survivors may prosper again. The task for 2009, therefore, is quite simple: Assure that you are one of the survivors. Looking beyond that, the industry will have to deal with the restructuring of the global economy and international trade arising from the financial crisis, which will bring challenges not yet imagined.