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Capt. S.Y. Kuo

Everyone has a role, a responsibility, in the economic crisis that started in the U.S. and that is gripping the world today. And each of us has to face this reality. Our industry is suffering from the lack of a long-term view.

Those of us in shipping foresaw this economic crisis looming before the general public knew it was here. It began three or four years ago when massive orders for the super-size vessels were placed. In 2009, we will see the peak year of the delivery of those vessels, which will then be in service. The overcapacity problem has now collided with the economic downturn an unfortunate situation.

In 2008, the Asia-Europe trade already felt the pressure of this problem; as the volume of available space increased, freight rates spiraled downward. Because of the overcapacity, load factors dropped dramatically and are still falling. The next trade routes to feel this pressure were the U.S. services, where business slowed by the third quarter. There was no peak season in 2008, and rates were compromised.

Looking ahead, ocean carriers must focus on establishing and maintaining mutual trust. In a business where there are few secrets, it is important that we work together to help our industry flourish while not abandoning the healthy spirit of competition. In addition, we must be careful not to sacrifice freight rates for load factor or market share. When that is the only goal, rates spiral downward. Ocean carriers operate at a loss and then must make triple efforts to bring rates back to a compensatory level. In these cases, there are no winners.