Shipping industry sailing through turbulent waters

By John Oyuke

After reaping from several years of huge shipping volumes and building ever larger ships to meet demand for seaborne trade, the global shipping industry is sailing in turbulent waters.

The global financial crisis and the economic downturn have left the once booming industry struggling with overcapacity and falling productivity.

According to the United Nations Conference on Trade and Development (UNCTAD), though last year marked a major turning point in the history of the world economy and trade, the supply of new vessels continued to grow.

This growth, the agency explains, was the result of vessel orders placed before the global financial crisis, when the industry was still expecting high demand.

"The reason for the decline in average productivity is the oversupply of tonnage available, which contrasts with the reduced growth in world seaborne trade," according to the UNCTAD’s annual Review of Maritime Transport publication. The Review of Maritime Transport 2009 suggests that while the industry is confronted with a surge in oversupply and tumbling freight rates, the situation has been compounded by other developments, including maritime security at sea and the need to address climate change.

Increase in piracy

The increasing number of piracy and armed robbery incidents against ships — particularly off the Somali coast and in the Gulf of Aden — have led to investigations on ways to adequate response in various forums, including the International Maritime Organisation and the United Nations. Over 80 per cent of international trade in goods is carried by sea, and the UNCTAD’s Review provides valuable statistical information on this sector and other transport modes.

The review says this year, global merchant fleet had expanded by 6.7 per cent to 1.19 billion deadweight tonnes (dwt) — the weight of cargo, fuel, stores, passengers and crew carried when ship is loaded to maximum standard load line.

The tonnage of oil tankers increased by 2.5 per cent and that of bulk carriers by seven per cent.

And for the first time, the total tonnage on dry bulk carriers exceeded the tonnage on oil tankers. Together, these two types of ships represent 71.2 per cent of merchant fleet tonnage.