Shipping Industry Fights for Survival
Tuesday, August 11, 2009
Speigel Online www.spiegel.de
The global economic crisis is wreaking havoc on shipping: Demand and prices have collapsed and ports are filling up with fleets of empty freighters. The crisis has fueled cut-throat competition and not all companies will survive. Germany's Hapag-Lloyd alone needs 1.75 billion euros to stay afloat.
The Andromeda towers almost 40 meters (131 feet) above Hamburg's Burchard wharf, as countless feeder ships and container stacking vehicles bustle around it like insects around a bored elephant. Shipyard CMA CGN's new flagship container ship, one of the world's largest, boasts a 100,000 horsepower engine, can carry 11,400 containers, is 363 meters long and was delivered from South Korea only a few months ago -- at a price of $160 million (€111 million).
The Andromeda was built for an economic boom that never seemed to end, at a time when more and more containers, bigger ships and ever-growing port facilities were needed.
With each passing minute, lift bridges hoist containers from the quay wall onto the deck of the 100,000-ton behemoth. When fully loaded, the vessel has space for containers arranged up to 18 wide, 86 long and 19 tall. In the end, the Andromeda is loaded to about two-thirds capacity. "That's not bad," says Captain Ivan Bozanic. "At least nowadays."
The next day, the CMA flagship leaves Hamburg for China, the point of origin of its 68-day round-trip voyage. The Andromeda travels exclusively between East Asia and northern Europe, a speedway of global trade. It steadily shuttles TV sets, mobile phones, T-shirts, and everything else China's factories are churning out, toward the West, and returns to the East loaded with finished parts, machines and empty containers.
Until not too long ago, shipping was both the greatest beneficiary and hammering pulse of globalization, moving goods around the world at an ever-increasing pace. The industry has been growing rapidly from year to year, ever since China became the world's factory. In 2008, roughly 500 million standard containers (TEU) were transported on the world's oceans -- twice as many as at the turn of the millennium.
Year after year, new and ever more massive ships were built, ports were expanded and new scheduled service introduced. The cargo capacity of the world's combined container fleet increased from 4 million TEUs in 2000 to 12.5 million today.
Many became rich in the years of the boom, including ship owners, bankers and investors, particularly in Hamburg. In the last decade, the northern German port city became the world's leading center for the financing and operation of new ships. Germans own 35 percent of the container ships in operation worldwide, and close to 60 shipping banks and financiers are headquartered in Hamburg. Hamburg-based Hapag-Lloyd became one of the world's leading shipping line operators.
A Stifled Boom
But now the global financial and economic crisis has stifled the boom in container shipping, and it has happened almost overnight. For the first time in its history, the industry has stopped growing and, in fact, is shrinking. In the first six months of this year alone, the shipping industry declined by close to 16 percent.
The new giant ships are now much too big for the cargos they transport by sea, and often they sail half-empty -- if at all. Billions are being spent to expand ports to handle a boom that no longer exists. Leading shipping line operators are on the verge of bankruptcy, as are shipping banks and charter shipping companies. The industry, once one of the biggest beneficiaries of globalization, now threatens to turn into one of its chief casualties. [snip]
Full text at http://www.spiegel.de/international/business/0,1518,641513,00.html#ref=…
The Andromeda towers almost 40 meters (131 feet) above Hamburg's Burchard wharf, as countless feeder ships and container stacking vehicles bustle around it like insects around a bored elephant. Shipyard CMA CGN's new flagship container ship, one of the world's largest, boasts a 100,000 horsepower engine, can carry 11,400 containers, is 363 meters long and was delivered from South Korea only a few months ago -- at a price of $160 million (€111 million).
The Andromeda was built for an economic boom that never seemed to end, at a time when more and more containers, bigger ships and ever-growing port facilities were needed.
With each passing minute, lift bridges hoist containers from the quay wall onto the deck of the 100,000-ton behemoth. When fully loaded, the vessel has space for containers arranged up to 18 wide, 86 long and 19 tall. In the end, the Andromeda is loaded to about two-thirds capacity. "That's not bad," says Captain Ivan Bozanic. "At least nowadays."
The next day, the CMA flagship leaves Hamburg for China, the point of origin of its 68-day round-trip voyage. The Andromeda travels exclusively between East Asia and northern Europe, a speedway of global trade. It steadily shuttles TV sets, mobile phones, T-shirts, and everything else China's factories are churning out, toward the West, and returns to the East loaded with finished parts, machines and empty containers.
Until not too long ago, shipping was both the greatest beneficiary and hammering pulse of globalization, moving goods around the world at an ever-increasing pace. The industry has been growing rapidly from year to year, ever since China became the world's factory. In 2008, roughly 500 million standard containers (TEU) were transported on the world's oceans -- twice as many as at the turn of the millennium.
Year after year, new and ever more massive ships were built, ports were expanded and new scheduled service introduced. The cargo capacity of the world's combined container fleet increased from 4 million TEUs in 2000 to 12.5 million today.
Many became rich in the years of the boom, including ship owners, bankers and investors, particularly in Hamburg. In the last decade, the northern German port city became the world's leading center for the financing and operation of new ships. Germans own 35 percent of the container ships in operation worldwide, and close to 60 shipping banks and financiers are headquartered in Hamburg. Hamburg-based Hapag-Lloyd became one of the world's leading shipping line operators.
A Stifled Boom
But now the global financial and economic crisis has stifled the boom in container shipping, and it has happened almost overnight. For the first time in its history, the industry has stopped growing and, in fact, is shrinking. In the first six months of this year alone, the shipping industry declined by close to 16 percent.
The new giant ships are now much too big for the cargos they transport by sea, and often they sail half-empty -- if at all. Billions are being spent to expand ports to handle a boom that no longer exists. Leading shipping line operators are on the verge of bankruptcy, as are shipping banks and charter shipping companies. The industry, once one of the biggest beneficiaries of globalization, now threatens to turn into one of its chief casualties. [snip]
Full text at http://www.spiegel.de/international/business/0,1518,641513,00.html#ref=…