2010 EPRC: A Perilous Sea Voyage

Operators of ocean shipping lines endured a seasick-inducing 2009, but recovery has begun to take shape in 2010. That was the message from presenters at a 2010 European Paper Recycling Conference (EPRC) session on freight and logistics.

Michiel Messchert of Danish shipping line Maersk told attendees, “We had days [in 2009] when we lost $9 million per day.

In 2009, said Messchert, Maersk’s volumes declined by 14 percent compared to the year before, a plunge that Messchert called “unknown.” A reluctance by shipping line competitors to lose volume, which led to overcapacity, caused Maersk revenue to decline even more—by 30 percent. Summarized Messchert, “The whole industry lost a whole lot of money.”

“We think the worst is over for shipping,” Messchert continued, who added that rates bottomed out in mid-2009.

After the plunge of 2009, Maersk is predicting that shipping volumes will begin to rebuild on a 3.2 percent annual average between 2010 and 2015.

Other trends spurred by the difficult market of 2009 included cancellations or delays on new vessel orders and the introduction of “super-slow steaming” schedules that add extra days to a ship’s voyage, but that allow shipping lines to burn less fuel and leave a smaller carbon footprint.

Presenter Hans Muelenberg of global freight and warehousing firm Kuehne + Nagel, Hamburg, Germany, also referred to slow steaming in his comments to attendees. A potential shortcoming in the technique, said Muelenberg, is that it takes containers out of circulation for a longer period of time, with the potential to lead to periodic shortages.

Another trend that has been developing in 2010, said Muelenberg, is a greater amount of container shipping from Europe to Latin America. Volumes on that route have risen by 47 percent in the first quarter of 2010 and by 56 percent in the second quarter of the year, he said.

Muelenberg said some new vessel orders are back in production, but that the 1.5 million TEUs (twenty-foot equivalent units) coming online in 2010 may be only half of what is required.

Overall, said Muelenberg, “Carriers are making money again, so they can provide the services that you and I require.”

The 2010 European Paper Recycling Conference was Nov. 3-4 at the Sheraton Congress Hotel in Frankfurt, Germany.