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MUST READ: THE CONTAINER CRISIS
Courtesy of The Pragmatic Capitalist
Excellent article here on the shipping industry and the problems that the recession has caused and continues to cause:
The global economic crisis is wreaking havoc on shipping: Demand and prices have collapsed and ports are filling up with fleets of empty freighters. The crisis has fueled cut-throat competition and not all companies will survive. Germany’s Hapag-Lloyd alone needs 1.75 billion euros to stay afloat.
the global financial and economic crisis has stifled the boom in container shipping, and it has happened almost overnight. For the first time in its history, the industry has stopped growing and, in fact, is shrinking. In the first six months of this year alone, the shipping industry declined by close to 16 percent.
The new giant ships are now much too big for the cargos they transport by sea, and often they sail half-empty — if at all. Billions are being spent to expand ports to handle a boom that no longer exists. Leading shipping line operators are on the verge of bankruptcy, as are shipping banks and charter shipping companies. The industry, once one of the biggest beneficiaries of globalization, now threatens to turn into one of its chief casualties.”There has never been a crisis like this before,” says Reinhard Lange, the CEO of Kühne + Nagel, the world’s largest sea-freight forwarder. Shipping line operators alone are expected to suffer combined losses of $20 billion in 2009.
Drewry Shipping Consultants, the world’s top consultant to the industry, warns: “The industry is looking at the edge of a deep abyss.” And industry publication Lloyds List writes: “Container shipping was thrown into a full-scale panic.”
This sense of panic is more palpable in Hamburg than almost anywhere else in the world.
