Has the box bubble burst?

(From Lloyds List)

T he penny seems at last to have dropped that the shipowners' market which has obtained albeit briefly in the liner trades, would appear to be over.

There are still some optimists suggesting that this is but a temporary phase and the market will bounce back again with the US economy, but they are few in number. Most experts seem to remain impressed with the likely effects of the backlog of containership newbuildings which the market will have to digest before rates soar again.

It is, as they say, 'my sensible anticipation, his rash speculation and their reckless over tonnage' which between them and quite unaccountably, produce present uncertainties.

A number of changes will clearly flow from the present downturn in demand. It will put more pressure on carriers to confront their fuel price increases. Look for a more robust prosecution of the case for surcharges despite the strident objections of the shippers.

Look, too, for a general offloading of older, smaller and less economic units. The post-panamax monsters now entering service are not ordered for fun or hubris, but for the economies which they can deliver to the carrier.

And, while smaller units with life in them will be transferred to other routes, the older ships which surging demand have maintained in existence will increasingly be demolished.