Friday, January 1, 2010

What's ahead - 2010

I hesitate to make any predictions for 2010, but it's kinda fun to gaze into the crystal ball.

Last year I said we would be a recession until 2011.

We are definitely changing into a world economy.

Those of us in the U.S. have not fully understood our impact on the rest of the world's economies. The saying goes "When the U.S. sneezes, ________ (fill in the country name of your choice) gets a cold".

China is very quickly emerging as the dominant economy in the world.

China has already surpassed Greece in purchases of bulk carriers, and now China will build more ships, knocking out Korea who until now was the largest shipbuilder.

Something has to happen in the containership industry, but to be honest, I don't know what. I was surprised that the German government bailed out Hapag-Lloyd, and the French government has said they will help CMA CGM stay in business.

Without this government intervention there would have been considerable consolidation.

The KG funds in Germany are under a lot of pressure. I don't really understand the financial structure of KG funds. I do know that investors get together and buy a ship and operate it (all handled by the KG of course), but it's my understanding up until now there were no funds set aside for losses. How long these ships will stay owned by KG funds, or put up for sale, is anyone's guess.

And new ships continue to come out of shipyards.

So, all in all, 2010 will still be quite difficult for ocean carriers and shipowners.

But, these lean times are good for everyone. It makes companies look at how they do business. They become more efficient and cut costs.

I just hope during this slow time, some of the international shipping companies start upgrading their computer systems.

Maybe FEDEX or UPS should buy an ocean container carrier.

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