Only history will tell whether 2008 go down as the worst year ever in container shipping. Or will that dubious distinction be 2009’s? When will the depth of this crisis be recorded?
In the fourth quarter of 2008, global demand crashed about 20 percent. Lines were still profitable that year, but in 2009 the full horror of the financial crash hit the liner shipping industry. There has never ever been anything like it. Hundreds of container ships have been tied up, and lines are fighting for survival.
It was ironic yet pure coincidence that on Oct. 18, 2008, liner conferences were abolished on the European trades. I am often asked whether this loss of antitrust immunity had any impact on worsening the decline in rates. Certainly the abolition of conferences did not help, but it was the dramatic loss of demand that was too great for any system to maintain rate levels.
However, uncertainty caused by the abolition of conference surcharges and ancillary charges did not help the situation and added to the rate erosion. But one calamity was avoided: the EU’s Directorate Generale (DG) for Competition turned its attention to the renewal of the regulation governing shipping consortia. This legislation, which to the acknowledgement of everyone had worked well, was due for renewal. The first draft of the reworked regulation was a disaster and would have ruled out antitrust immunity for virtually all consortia in Europe. The industry’s lobby was successful in changing DG Competition’s mind, and I have to acknowledge the wisdom of the EU Commission in listening to us.
Why was this so important? Because in order to maintain their services to customers, shipping lines are cooperating like never before. By doing so, they are reducing costs by utilizing bigger ships and managing to maintain services during the crisis.