As you all know, we certainly did not have great expectations for 2012 in the sense of rates and extra supply in the market on the carriers’ side. Now the first month is over and the Chinese New Year has passed. As expected one-two weeks before and after the Chinese New Year there was some space crunch on imports, but it’s stabilizing.
On the exports side, there was an increases from USEC to Asia which really didn’t stick well -at least the commodities that fill the vessels; while the rest of the export to other parts of the world is either at the same low rate levels or marginally lower than 6 months ago. It seems like reality will be very tough for carriers for the remainder of the year.
We already started to receive announcements from steamship lines that they need to increase their rates to keep the service going. I believe this is where the problem starts.
What most of the industry officials accept and think that needs to be done, is for a couple of carriers to either merge with one or several other carriers or get smaller, cut the space on main trades and serve niche trades with smaller vessels. We already heard the thoughts of MOL for such a merge plan with NYK and Kline which can form the 4th largest carrier with the current market numbers.
On the other hand, the governments (on the back of the stage) also get involved once the carriers are in tough situations. This happened already in 2009, and seems like it is happening again in 2011, which is understandable in the sense of keeping your country’s main carrier alive, however commercially it doesn’t only hurt the investors but primarily it hurts the entire shipping industry.
The World Bank reduced their global economic growth expectation to 2.5% for 2012, another set of bad news. So what is going to happen? Well, if something does not change in the shipping world within the next few months, 2012 might have a worse effect then 2009. Because let’s not forget, after 2009, in 2010 carriers licked their wounds, were profitable and recovered. 2011 was not the worst year for our industry, but it was not a good year either. On top of that, if you take a big hit in 2012, then there can be very serious consequences and these consequences will not only affect carriers directly but just like it happened in 2010, it will push the rates up marginally and effect all exporters and importers.
I believe (more “hope” than “believe” actually) before all this happens in 2012; there will be some major changes in the shipping world. This might include some carriers getting much smaller and some carriers merging. This will not only help those respective carriers but it will help the shipping industry as a whole.
About M. Can Fidan
The impact of this changes in the shipping community also affects the seafarer profession in general. Let us not forget that around 90 to 95% of the world trade are done by shipping and most if not all items are transported by shipping. The seafaring profession largely depend on a stable shipping market with more voyages , more charterers in which the ship owners are the main beneficiaries.
Since January of this year around 120,000 TEU’s have already been scrapped due to old age of container ships. The maritime community particularly authorities from Europe, the US and even Far East Asia are embarking on a campaign to get rid of old ships due to safety issues that affect the lives of crew on board, the marine environment due to pollution, attracting charterers for ship owners which forced them to re-fleet or acquire new ships which costs them a lot of money. In general the crisis in the shipping industry must find a suitable solution.