In the first nine months of two-thousand and eight everything was smooth sailing for the big shipping companies, especially for the largest shipping firm in the world—Maersk. But, the storm was brewing the last quarter of the year and since the beginning of 2009 it hasn’t been smooth sailing for them or any other shipping company.
The shipping giant reported 3rd quarter losses of $778 million and expects losses to exceed $1 billion for the year. This shipping news doesn’t raise enthusiasm for a recovering economy.
In a recent article by John W. Miller in the Wall Street Journal, “Maersk Signals Slow Sailing Ahead,” Maersk CEO, Nils Smedegaard Andersen sees rough sailing through 2010. Paraphrasing Mr. Andersen, “the shipping industry in general will remain under pressure in 2010.”
Maersk is not the only shipping company with “The Shipping Blues.” Neptune Orient Lines Ltd expects losses of $636 million this year. HHLA AG said its 2009 container revenue would fall 30%. And the bankruptcy of Eastwind Maritime a few months ago reduces global fleet size, but still exposes the fragility of shipping companies under current economic conditions.
Under the pressures of a trade boom bubble that could possibly burst, shipping companies stand to lose billions more through the next couple of years. The industry bet heavily on a fervent global economy and many placed orders for new ships during the height of the economic growth. Now they are scrambling to cancel orders, delay deliveries, or negotiate drastically lower prices.
There is at least some slightly positive shipping news. After the worst September at the Port complex of Los Angeles and Long Beach in 9 years, exports were up in October at the Port of Los Angeles. Ronald D. White who has been covering the West Coast ports, reported the increase in exports in his Los Angeles Times article, “Tide may be changing at Port of L.A.”
Despite the increase in exports at L.A., exports were down at Long Beach 10.1 % and imports were down at the 5 biggest West Coast ports by 14.2% in October compared to a year ago. It will difficult to see a ‘real’ recovery until shipping recovers.
Maersk and other shipping companies have been badly bruised by the economic slowdown and it appears it may take a long time for that bruise to heal. As shipping goes, so goes the economy.