Carriers are struggling to cope with overcapacity and weak freight rates, but maybe the global financial crisis actually did them a favour.
Container volumes cascading out of Asia in the mid-2000s were growing at somewhere around 10 percent a year. The carriers were ordering new ships as fast as possible as they frantically chased after market share.
Hindsight is a wonderful thing, but using it we can see that nothing good could have emerged from such a busy container ship orderbook.
In mid-2007, shipbroker Clarkson said container line orders had reached 5.1 million TEUs, just over half of the world’s 10 million TEU fleet.
Back then it seemed new orders were being made every week and Korean yards were floating vessels into service on a sea of Champagne.
Fast forward to April 2010 and the Champagne has soured, the ships that haven’t been delayed are sitting idle and carriers are making GDP-sized losses.
But just imagine how much worse it could have been if the halcyon days of container shipping continued for another couple of years. The orderbook may have even grown to equal the global fleet so that when the bottom fell out of the market, the crash would have been so much harder.
Huge debts, masses of idle tonnage, weak freight rates and a complete disappearance of profitability. Sort of like the business is now, only much, much worse.