The last thing any of us in this industry needs right now is another forecast of 2009 conditions. While some understandably are still hoping for improvement in the relatively near future, most appear to be coming to grips with a more sober view of the situation.
We’re in the midst of a pronounced worldwide economic downturn. Growth in world GDP and global trade has slowed dramatically and continues to deteriorate. Our industry is headed into a down cycle the likes of which we’ve never seen and the end of which we can’t predict.
The players in containerized ocean transportation appear to have begun, albeit a bit late, factoring this into their 2009 plans. According to accounts, many have taken unilateral action to reduce capacity, and some have begun to lay up vessels. This acknowledges the need to bring supply into line with significantly reduced demand, as deteriorating market conditions make it an absolute requirement to lower costs as quickly as possible.
That’s 2009 in a nutshell. The big question is: What’s next? The answer is: We’re not sure.
How long the economic recession will last is anyone’s guess. Unfortunately, as a result of over-exuberant ship ordering, the container shipping industry has found a way to create dynamics that will outlast the effects of the broader economic downturn.
There appear to be fundamental structural changes at work that will make the future look very different than the last decade. Government investments to stabilize the financial system and to sustain certain industry sectors will have unanticipated impact on global trade development. So this economic recession is likely to bring profound changes to our industry.
If the industry’s response to these unprecedented challenges is no different than the past, we are headed into a prolonged downturn and unlike down cycles of the past some will not survive. But if individual carriers respond prudently, there is a possibility that the worst effects can be mitigated and a more productive path forward set.