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Ingar Skiaker

We have just seen how much the world can change in 12 months! The U.S. government is now a major owner in several international finance institutions and in the worlds second-largest automaker.

The full impact of the economical downturn also has steamrolled the shipping industry, and there is no imminent let-up. Apart from the BRIC-countries of Brazil, Russia, India and China (save one), recovery in the major consumer areas seems to be slow and tepid — and with that, so will business recovery in most shipping segments. The record order books from 2008 have not been adjusted significantly, so excess capacity will remain for some considerable time. The financial markets have not recovered, and will continue to pose significant challenges for financing those orders.

The automotive industry is responding to the economic environment by focusing more on production efficiency and economies of scale. We already see a number of brands changing hands and possibly disappearing. This development will likely accelerate the industry’s globalization and lead to new, different trade flows.

Up to 20 percent of the global pure car-truck carrier fleet were laid up in 2009 because of the drop in demand, and a large number of old and technically inferior vessels are being scrapped. Although not as extreme as in some shipping segments, the PCTC order book will still drive a phase-out of older vessels and drive up average capital costs for operators.

In this situation, operational cost efficiency and strong market positions will carry the day in the car-carrier industry. Operators able to weather this storm and offer uninterrupted services and satisfy customer needs will be able to move their positions forward during the downturn and benefit when the recovery happens.