Printer Friendly

Shipping hit by global downturn; IN ASSOCIATION Rensburg Sheppares The Big Feature Shipping lines and major ports like Liverpool are having to rethink their futures in the face of the credit crunch.

Byline: Barry Turnbull reports

THE international shipping trade has been hit by the global economic slowdown that looks set to have a knock-on effect on the Port of Liverpool.

Container traffic, in particular, is sharply down, which may have repercussions for Peel Ports' plan for a pounds 100m post-Panamax container terminal at Seaforth.

Peel says it will take account of economic and financial conditions when it makes a final decision about the in-river engineering project in May.

The company has obtained a Harbour Revision Order to enable the work to go ahead if the plan proves viable.

Frank Robotham, Peel Ports marketing manager, said: "We are still doing detailed work on the engineering and costings, which won't be finished till next May. It is only then that we will look at the total costs and take a view on timescales.

"This is a project for the future growth of the port, so it would not necessarily be a short-term decision based on current economic conditions."

Current conditions are far from good. Container traffic is slowing up after three decades of steady growth and orders for raw materials have plunged by 94%.

The construction of a new terminal at Seaforth to handle the world's biggest container ships, knows as post-Panamax vessels, would have huge environmental benefits, taking 800,000 truck movements off the region's roads.

Current capacity at the Port of Liverpool is 700,000 units. The new facility would more than double capacity to 1.5m units.

Mr Robotham said: "We are not immune from the effects of a slowdown by any means, but the diversity of the port may mitigate the impact.

"If we were just a container port it may be another matter, but we offer a number of services such as ro-ro and various types of import and exports.

"It is difficult to say just what the impact will be at the moment.

Our financial year doesn't end till next March. The position will be clearer by then."

Mr Robotham said 2008 was a roller-coaster year, with the first half dominated by rising fuel prices followed by volatile exchange rates and a collapse of freight rates.

Hire rates for the post-Panamax ships have fallen alarmingly in recent months. Earlier this year, a typical rate was around EUR250,000, but that has now fallen to just a few thousand dollars today.

Shipping line Maersk, which has a major base in Liverpool, has laid up eight vessels at its Asian ports this month, with others expected to follow.

Liverpool-based container lines CMA CGM and Mediterranean Shipping declined to comment, but Ian Higby, chief executive of Atlantic Container Line, said: "Business is holding up in the north Atlantic at the moment but it is difficult to predict how things will go."

Maersk, the world's biggest container line, says it is better placed than many of its rivals to counter the market downturn because, unlike them, it has virtually no new ships being delivered in 2009 when the world's fleet is set to grow by 13% from 2008.

There are reported to be more than 80 container ships currently laid up, including a dozen larger vessels at anchor off Singapore, Hong Kong and Shanghai.

The Baltic Dry Index, which measures shipments of raw materials like steel and iron ore, has dipped 94% since June, indicating that demand and trade is grinding to a halt.

The index is seen as a leading indicator for economic growth and productivity because it deals with bulk materials required for manufacturing production.

A SPOKESMAN for Liverpoolbased Bibby Line said: "In general terms, the shipping market is suffering badly. The Baltic Index has fallen sharply and one of the reasons is that shipments are based on letters of credit and the banks have stopped issuing them.

"We don't think this will change in the immediate future. Freight rates have fallen dramatically and a lot of people are in for a lot of pain.

If the banks continue to refuse to lend money it may need to take government intervention."

Every day, the Baltic Exchange, in London, canvasses brokers around the world to ask how much it would cost to book cargoes of raw materials. As such, it is seen as an accurate barometer of global trade.

"It's a good thing Maersk is trying to react swiftly," said Steven Brooker, of merchant bank SEB Enskilda. "Definitely the top 10 to 20 carriers globally will try to trim capacity quickly. The last time we had major lay-ups like this was after 9/11. Then it was 3.3% of the global fleet. The number will far exceed that going into 2009."

Irish Sea services have also been hit by the downturn. Earlier this year, Norfolkline called off plans to splash out millions of pounds on new ships and more frequent services to Ireland from Birkenhead.

Its change of heart arose from a combination of recession in Ireland, rising fuel costs and a backdated business rates bill which is likely to cost millions.

The investment in new vessels would have increased freight capacity by 70% and passenger capacity by 25%.

But a slump in trade affecting Norfolkline's four vessels, serving Belfast and Dublin from Birkenhead's Twelve Quays, has changed all that.

However, it is not doom and gloom for everyone. Ferry company Seatruck says it plans to cash in on the situation by doubling capacity from Liverpool to Ireland. Its vessels only offer unaccompanied freight movements, thus saving on drivers' costs.

The Chamber of Shipping is warning the slump in the sector could be longer and deeper than ever before. However, president Martin Watson said recovery was inevitable: "The industry will recover because it is at the heart of world trade," he said.

First one, and then another - chill recessionary winds blow through companies in Liverpool's docklands

THE first real sign that the cold wind of recession was blowing through the Port of Liverpool was the shock announcement that the new pounds 6m fresh produce terminal had laid off three-quarters of the workforce.

The facility was only opened earlier this year, and was thought to have a bright future. Operator Go Associates was forced to lay off 34 out of 45 staff, citing a disastrous Spanish citrus season as the catalyst for a downturn in trade.

Operations director Andy Rickards said people had been laid off temporarily, adding: "We are very much focusing on generating sales from the rest of the world and generating volume to bring people back.

"The South African season starts in January and the Chilean season in February. We are also looking at America, Egypt and Morocco to generate business through the Liverpool terminal. There is still a belief in the terminal."

In another move, Coastal Container Line, owned by Peel Ports and based at the existing Royal Seaforth Container Terminal, has shed jobs.

It operates freight services between the UK and Ireland from Cardiff where 34 staff were made redundant.

Also brewing for some time has been the restructuring of business rates paid by port-based businesses, a tax change which claimed its first casualty just before Christmas.

Stevedoring firm Thomas Nichols Brown was wound up before being presented with a backdated rates bill of pounds 1.3m. Lobby group Mersey Maritime believes many more companies are under threat from the tax time bomb.

Dave Pendleton, business development director, said: "The backdating has to sit as a liability on your accounts, whether you have 10 days or 100 years to pay. If your balance sheet can't handle pounds 2m of debt, you're insolvent, and as a director you're operating illegally if you continue.

"There will be more casualties, we don't know where or when."

barryturnbull@liverpool.com

CAPTION(S):

Frank Robotham, Peel Ports marketing manager; A ship sets sail from the Mersey - but container traffic is slowing down, after three decades of steady growth Picture: HOWARD DAVIES; Difficulties down at the docks: Seaforth container terminal Picture: RICHARD WILLIAMS
COPYRIGHT 2009 MGN Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2009 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Features
Publication:Daily Post (Liverpool, England)
Geographic Code:4EUUK
Date:Jan 7, 2009
Words:1322
Previous Article:Only crystal ball could have raised spectre of gloom; IN ASSOCIATION Rensburg Sheppares.
Next Article:Law firm exceeds pounds 50m turnover; IN ASSOCIATION Rensburg Sheppares The Big Feature Private business.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters