Owners cut costs to weather downturn

With the world GDP growing at only 2 per cent during 1998, the container ship industry is under constant pressure to reduce costs and improve efficiency. No part of shipping is so directly connected with world trade as container shipping, says Hans Payer, member of the executive board of Germanischer Lloyd. But Chris Gyntelberg of Maersk Line, which operates over 120 container vessels, with a total capacity of 270,000 TEU on global services, remains optimistic. “Our main concern is the imbalance in the east/west trade,” he says. “But it is a temporary situation as far as we can see. Exactly when the economy and the trade will start rebounding is very difficult to predict.”

This is echoed by Mr Payer who sees a return in the world GDP growth rate of up to 4 per cent by 2001 and a doubling of container traffic in European ports by 2006. “I am convinced that we all need courage for continued optimism at this time.” He says. “The grounds for the economic development of most Asian countries are solid and the outlook for the world economy continues to be good. Some belt-tightening is healthy no doubt, but the crisis of the past months is not seen as a fundamental deviation from growth.”

Mr Gyntelberg marks the key trends in the container industry as: “continued globalisation, the onward march of mergers and acquisitions with the weeding out of the weaker players, increased competition, market saturation, and a continued downward trend in freight rates.” Paradoxically it is the drop in freight rates which is seen by Mr Gyntelberg as one of the driving forces behind the conversion of traffic to containers.