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Wednesday, June 03, 2009

Kuehne+Nagel predicts double-digit fall in global box volumes

Nigel Lowry, Athens - Tuesday 2 June 2009


MORE gloom has been poured on prospects for a liner shipping recovery with one of the world’s largest sea freight forwarders estimating a double-digit tumble in global container volumes this year.
Otto Schacht, head of seafreight at Hamburg-based Kuehne+Nagel, said the first three months of the year were “very negative”.
He said volumes dived 17% in the quarter, despite a March uptick when consumer companies restocked before “they then put their foot on the brake again”.
He added: “We believe by the end of this year global container volumes will be down by 10%.”
Some shipbroking houses had posited a 5% decrease for 2009 but, Mr Schacht said this was optimistic.
Speaking at the BIMCO general meeting in Athens, Mr Schacht said the worst hit trade was the transpacific, but all east-west trades were negative and would probably remain negative for next year. Only in 2011 would there be a small increase.
Kuehne+Nagel is concerned at the plight of liner companies it is working with, despite recognising the crisis as an opportunity for forwarders.
Forwarders had already increased their share of cargo from a traditional 10% to about 33% today. Mr Schacht said this growth would accelerate as cost pressures forced lines to cut staff and close offices.
But the company was wary that carriers could be driven out of business altogether.
“We tell our customers that rates will remain under pressure for a long time. But at today’s rates no carrier – even a Maersk – will survive for long. So rates will have to go up.”
Ron Widdows, group chief executive for Neptune Orient Lines, also focused on what he called “the silly rates we have today”.
He said: “In the container sector, the question is can we endure to the point where we can price at a level that will allow us to stay in business.”
Chinese growth would be no immediate help to the sector because in the first stage it would boost raw material demand rather than the export volumes driving the container business.
“There is no quick fix to this,” said Mr Widdows, who spoke to BIMCO delegates by video link.
“It is going to take years to get capacity back to the point where it provides for a healthy environment,” he said.
BIMCO’s president designate, Robert Lorenz-Meyer of Hamburg shipping company Ernst Russ said: “We have ordered too many expensive ships which we cannot finance and cannot even crew, which is another issue.”
He defended container owners’ rationale in ordering huge new ships from the point of view of environmental and cost efficiencies, but added: “These big ships will probably not be needed to the extent they have been built.”