Shipping industry prepares for economic turnaround
(bizjournals.com) There were no Pollyanna words of encouragement for shipping in 2009 at an American Association of Port Authorities conference Thursday.
Richard Wainio, Tampa port director, said 2009 is going to be “a very difficult year.”
James Brennan, partner with Norbridge Inc., a Concord, Mass.-based management consulting firm for the transportation and logistics industries, echoed that assessment. Brennan spoke to more than 100 shipping industry executives, representing ports and vendors around the world, at the Grand Hyatt Hotel in Tampa.
Even with potential bailout money, there would be a lag of perhaps 18 months before any shipping industry infrastructure projects could be completed and provide benefits for the economy. Manufacturing inventories have risen since 2002 and any economic recovery would have to be predicated on companies working off those excess inventories, Brennan said.
Brennan predicted it would be the first half of 2011 before the economy returns to normal, although it should begin to turn around in 2010.
The dollar’s weakness globally should make it easier to export goods, but imports still outweigh exports by 2.5 to 1. Even an increase in exports can’t get the country out of its current malaise, Brennan said.
While the world tries to dig itself out of the global recession, the shipping industry is making plans to expand its capacity with an influx of new super-sized container ships. The Panama Canal is expanding with a new route alongside the old one and will be able to accommodate 12,600 TEU (20-foot equivalent) sized ships. It plans to be ready for operation by 2014.
Panama invested more than $1.6 billion in the canal in 2008 with its construction efforts, said Rodolfo Sabonge, vice president of market research and analysis for the Panama Canal Authority. It invested $113 million as recently as 2000.
Since 2002, container business through the canal has doubled to 124 million tons in 2008. Dry bulk goods accounted for 51 million tons last year, second behind containers.
In order to capture some of the new trade opportunities the canal will offer, Tampa will have to expand its capacity capabilities to handle the larger ships.
The worldwide container fleet should grow by 35 percent over the next five years, Brennan said. China still leads the world in container shipping and that looks to remain the same for years, he said.
A key to expanding container shipping is improving the intermodal rail transportation system, Brennan said.
