After decades of growth in volumes, 2009 will go down as the first year in which global container trade failed to expand. For sleuths trying to identify the culprit behind the downturn in the liner shipping sector, it was very much a case of the missing cargo.

Tracking Down

With the global recession in full swing, in 2009 consumers around the world tightened their belts, which was bad news for the container ship-ping industry indeed. Container volumes on the mainlanes from the Far East to Europe and North America plummeted by over 15%. Few trades, if any, remained unaffected and, having grown by an average of 9.9% each year over the previous 30 years, global box trade contracted by an unprecedented 10% last year.

Capacity Clues

If that wasn’t bad enough, at the same time boxship capacity in 2009 was scheduled to see extremely rapid expansion, with a substantial number of very large containerships set to hit the water. At the start of 2009 the containership orderbook stood at 6.0 million TEU, almost 50% of the size of the active fleet.

Significant capacity growth allied to the drop in trade flows obliterated any possibility of equilibrium between supply and demand. As it turned out, delivery slippage and delay offered some crumbs of comfort and meant that boxship capacity grew by a more restrained than expected 6.3% in 2009, but the gap between supply and demand growth still remained impossibly vast.

A Nasty Ending

For all the players in the container shipping sector the impact was acute. Shippers moved less cargo, and carriers chalked up huge financial losses with freight rates on almost all routes under enormous pressure, even if some portion of rate losses on some trades were regained later in the year. Faced with collapsing volumes, much boxship capacity was taken out of service and ‘idled’, with the total around 1.5 m TEU at the end of 2009. Containership owners and investors bore a heavy burden. With less de-mand for charter vessels, boxship charter rates remained in a highly depressed state all year, down over 60% on 2008 and around or below operating costs. Asset prices fared no better and end 2009 prices were over 60% down since September 2008.

Not Easily Solved

In 2010, even though latest data suggests some improvement in volumes on key trades, it won’t be an easy road to recovery for the containership sector. The missing cargo was no real mystery but globally volumes will have to rise by 10% before they are back to 2008 levels. Have a nice day.