Lest we forget

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By Lloyds List Comment

Friday 20 February 2009

IF, as Cosco boss Wei Jiafu believes, government global stimulus plans are finally working, then it can only be good news for the shipping sector.

As he pointed out, the Baltic dry index has already more than doubled in the two months since it fell to an all-time low of 663 points in early December.

Given the current spending programmes instituted by the US and Chinese governments, that will see almost $1.4bn injected into infrastructure construction over the next few years, it can only be hoped that recovery in the shipping sector, particularly dry bulk, will continue.

But as Capt Wei also rightly said, there are longer term problems facing the container shipping and car carrier sectors which only a recovery in consumer sentiment and demand will address.

President Barack Obama has at least set the ball rolling by pledging that his administration’s $800bn spending plan will support 3.5m jobs. “If people have jobs, demand and supply can restart,” Capt Wei said.

But while the various government spending plans mark a significant milestone in the process of recovery in both the shipping and wider economic markets, they are only a beginning. They do little to address the underlying structural issues of greed, speculation and overcapacity affecting the maritime industry.

Some would argue that greed and speculation have already been dealt with as a result of the collapse in the shipping and financial markets, while overcapacity will be taken care of through increased scrapping and cancelled or abandoned orders.

But that is slightly missing the point. The shipping crisis of the 1980s was partly caused for the result of the same three reasons, yet few, particularly in Europe, learned that salutory lesson.

It can only be hoped the current tsunami remains longer in people’s minds than previous crises. It also must be hoped that the shipping sector, and those associated with it, are humbled by the experience and work towards preventing a similar devastating occurence in the future. Surely this should be the crisis to end all crises.