As we enter 2009, there is a great deal of uncertainty in global markets that is causing concern for both the ocean carrier and container-leasing industries.
The dramatic drop in containerized volumes in major trades has had a chilling effect on the near-term global trade outlook. Ocean carriers are laying up ships because of reduced cargo growth and the new vessels being delivered. New container production effectively ceased in the second half of 2008.
While it is generally recognized that the recent financial market difficulties have played a significant part in the curtailing of purchases by consumers worldwide, the speed of the current trade decline has surprised many.
A major reason for this sudden decline is that the efficiency of today’s supply chains allows rapid adjustments to demand changes. For consumer goods, point-of-purchase data is instantaneously transformed into the order process in the supply chain. This efficiency has manifested itself in this rapid change in cargo volumes.
Cargo growth should recover just as quickly as it declined — when consumer confidence is restored, sales increase, buffer inventories are absorbed and resultant purchase orders resume. The optimistic view is that reasonable cargo growth will be realized in the second half of 2009.
Container-leasing companies have the capability and flexibility to rapidly adapt to the market changes. It is expected that during the anticipated period of rapid recovery, ship capacity deployment will again increase, and additional containers will be required to meet the capacity requirements. The leasing industry will be poised to provide significant contributions of equipment to meet the demand through its fleet flexibility and access to funding that may be unavailable or undesirable to ocean carriers.
The incoming U.S. president and Congress have indicated their intent to expand U.S. infrastructure investment. While it is likely that much of the material used for this investment will originate in the U.S., there are benefits to be realized by the international trade community, in the areas of near-term cargo potential, and long-term infrastructure efficiency.