Ship Slump
Where are they now?
Ocean shipping is what delivers the goods in world trade. So I was concerned to read in the New York Times last Friday that a huge number of ships are lying idle, waiting for future cargoes to materialize.
It’s not as bad as it appears. The idleness mostly reflects a surge in the number of new vessels coming out of shipyards. Recessions can be a good time to build your fleet, because you can get better prices from shipyards than during a boom. And some of the big shipping companies have overextended themselves (just like banks), initiating too much new construction in the boom times now past.
But some of the idleness is the sad legacy of several ocean shipping firms shutting their doors last year. The major carriers lost $20 billion in 2009, and at least seven smaller lines sank from sight. Their ships are now lying idle somewhere.
This is a huge, huge business – one that most of us take for granted unless we are using them, or live and work near a major port. One researcher guesses that the liner industry (the ships that carry containers on regularly scheduled routes) accounts for 13.5 million jobs in shipping, ports, shipbuilding and related industries.
Traffic is improving as the world withdraws from recession, but it is uneven. The greatest pickup is in the bulk trade, meaning employment for tankers and bulk carriers carrying oil or minerals. The container trade has not responded, another indication that recoveries are still a few months away from hitting their stride. Ten percent of the world’s container ships lie idle and another 371 new container ships are expected to slide down the ways this year. Not a good time to look for profits in the container ship business, but – for the rest of us – this might help keep shipping rates reasonable as demand for goods rises.
