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            october 19, 2019

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The outlook for the container shipping sector to remain cautious


The outlook for the container shipping sector in 2010 is said to remain cautious, despite economic indicators pointing to a recovery in the world economy next year, according to analysts.
A combination of factors, including uncertainty over the pace of world economic recovery, weak freight rates, poor demand on all trade lanes, particularly on the key East-West trades, and the continuing growth of the world idle box fleet are expected to hinder the recovery of the shipping industry in 2010, which is experiencing unprecedented lows.
Analysts expect freight rates to remain under pressure across the whole shipping sector, including the dry bulk market.
Shipbroker Clarksons has forecast that container volumes will contract by 8.3 per cent this year, as against a growth of 4.8 per cent in 2008.
As against this, London-based shipping consultancy, Drewry, predicts the world container trade will increase by one per cent in 2010, while Washington-based forecaster IHS Global Insight anticipates growth of 6.8 per cent next year.
The report noted that Drewry’s global supply demand index, a key measure of the container industry, is expected to hit an all-time low this year of 83.4. A figure above 100 indicates a strong market. However, the index is anticipated to fall to 79.6 in 2010, as against 100.1 in 2008 and 105 in 2007.
On the other hand, container shipping lines hope the traditionally busy peak period that normally begins in August and lasts till Christmas, will be better than last year’s recession-shortened season, but it is not expected to see the same volumes as two years ago, when the market was booming.
This is compounded by a report that the first quarter revenues of 11 of the main container shipping companies had decreased by 35 per cent in the first quarter of 2009, compared to the same period last year, to $14.45 billion.
Further, revenue reductions are expected for the rest of the year and liner operators could face a $40-$50 billion combined revenue shortfall for 2009, when compared to 2008, much larger than that currently predicted by analysts, the report added.
Furthermore, the growing number of idle vessels is expected to place additional pressure on carriers’ profitability in spite of their cost-cutting measures and attempts to delay vessel deliveries, Exim News Service reports.

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