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Shipping hit by global downturn
Written by winnerdk on 7th January 2009 8:40pm
By Barry Turnbull, Liverpool Daily Post - Shipping lines and major ports like Liverpool are having to rethink their futures in the face of the credit crunch. The international shipping trade has been hit by the global economic slowdown that looks set to have a knock-on effect on the Port of Liverpool. Container traffic, in particular, is sharply down, which may have repercussions for Peel Ports’ plan for a £100m post-Panamax container terminal at Seaforth. Peel says it will take account of economic and financial conditions when it makes a final decision about the in-river engineering project in May. The company has obtained a Harbour Revision Order to enable the work to go ahead if the plan proves viable. Frank Robotham, Peel Ports marketing manager, said: “We are still doing detailed work on the engineering and costings, which won’t be finished till next May. It is only then that we will look at the total costs and take a view on timescales.
Editor’s Comment: Decreases in consumer spending across the board will be the obvious trickle-down effect of a global economic downturn, resulting in lower demand for international container shipping. Watch the Panama Canal monthly transit statistics closely for more similar indications. If you will remember, the Panama Canal Pilots held a kind of work-slowdown at this time last year which they termed a "malicious compliance” action - about 50 or 60 Panama Canal pilots did exactly what was required of them and no more, causing a tremendous back-up in the Panama Canal. They picked January and February 2008 to start their action exactly because at that time there was an expected seasonal surge in Panama Canal ship traffic. In reading this report from the Liverpool Daily Post, it appears the surge in shipping seen last year won't be materializing this year, thanks to the global economic slowdown. My question - How might these reduced levels of Panama Canal traffic affect funding and revenue issues for the Panama Canal expansion project?
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“This is a project for the future growth of the port, so it would not necessarily be a short-term decision based on current economic conditions.”
Current conditions are far from good. Container traffic is slowing up after three decades of steady growth and orders for raw materials have plunged by 94%.
The construction of a new terminal at Seaforth to handle the world’s biggest container ships, knows as post-Panamax vessels, would have huge environmental benefits, taking 800,000 truck movements off the region’s roads.
Current capacity at the Port of Liverpool is 700,000 units. The new facility would more than double capacity to 1.5m units. Mr Robotham said: “We are not immune from the effects of a slowdown by any means, but the diversity of the port may mitigate the impact. “If we were just a container port it may be another matter, but we offer a number of services such as ro-ro and various types of import and exports. “It is difficult to say just what the impact will be at the moment. Our financial year doesn’t end till next March. The position will be clearer by then.”
Mr Robotham said 2008 was a roller-coaster year, with the first half dominated by rising fuel prices followed by volatile exchange rates and a collapse of freight rates.
Hire rates for the post-Panamax ships have fallen alarmingly in recent months. Earlier this year, a typical rate was around $250,000, but that has now fallen to just a few thousand dollars today. Shipping line Maersk, which has a major base in Liverpool, has laid up eight vessels at its Asian ports this month, with others expected to follow.Liverpool-based container lines CMA CGM and Mediterranean Shipping declined to comment, but Ian Higby, chief executive of Atlantic Container Line, said: “Business is holding up in the north Atlantic at the moment but it is difficult to predict how things will go.”
Maersk, the world’s biggest container line, says it is better placed than many of its rivals to counter the market downturn because, unlike them, it has virtually no new ships being delivered in 2009 when the world’s fleet is set to grow by 13% from 2008.
There are reported to be more than 80 container ships currently laid up, including a dozen larger vessels at anchor off Singapore, Hong Kong and Shanghai.The Baltic Dry Index, which measures shipments of raw materials like steel and iron ore, has dipped 94% since June, indicating that demand and trade is grinding to a halt.
The Chamber of Shipping is warning the slump in the sector could be longer and deeper than ever before. However, president Martin Watson said recovery was inevitable: “The industry will recover because it is at the heart of world trade,” he said.
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