Drewry Shipping Consultants has reported that the worst of the recession was over and projected global container traffic to increase by 3.4 per cent in 2010.
Drewry Shipping Consultants has reported that the worst of the recession was over and projected global container traffic to increase by 3.4 per cent in 2010. "Carriers have to substantially improve revenues in 2010 and this means that the transpacific rate negotiations with shippers this year are the most crucial ever," said Mr Neil Dekker, Editor of the monthly report.
"There are no real signs yet of US consumers changing their spending habits, and it will be very much a case of shippers bailing out the carriers. The big question is how much will they acquiesce to the rate demands of carriers," Mr Dekker wondered.
If revenue failed to increase, carriers may be forced to sell assets, like terminals, to stay in business, he said.
"Even if the industry could secure the same amount of fresh cash in 2010 as it received from shareholders in 2009, it would not be sufficient to cover its needs. An estimated $1.4 billion in cash may be needed from other sources to keep the carriers trading," he calculated.
What would happen if the banks or the shareholders refuse to inject more cash?
Three scenarios present themselves: Either the carriers will be liquidated, causing financial harm to shareholders, suppliers and banks; or carriers will walk away from vessel orders with shipyards, causing damage to the shipyards or governments are forced again to rescue the carriers," he said.
"There is a strong argument for thinking that if a major carrier had been allowed to fail, the market would have had a much better opportunity to correct itself and lay the foundations for a more profitable industry in the long-term," he added.