Given current global economic conditions, we do not expect much growth in container movement early in the new year, but we are cautiously optimistic about the second half of 2009.
As a result of several years of dynamic growth in cargo volume, particularly in the European trades, many carriers were encouraged to build larger container vessels to keep pace with anticipated long-term growth conditions. Many of these ships have already been delivered, with construction projects continuing beyond 2011. With supply likely to exceed demand, carriers will take steps to manage capacity.
In an attempt to remain competitive and strike a supply-demand balance, many carriers have begun scrapping older vessels while implementing slow-steaming of their active vessels. Schedule adjustments are being made to reduce capacity during slack months, while some carriers have begun laying up vessels until conditions improve.
Ironically, sluggish market conditions have resulted in lower fuel costs, and therefore I don’t anticipate a significant cost increase in cargo handling and vessel operations. There are always new costs associated with environmental issues and security, and these I expect will increase steadily. In the end, customers and carriers must reasonably share the costs.