OOCL (USA)

The financial crash and the subsequent credit shrink caused a drastic reduction in global trade, against a large capacity increase from previous years’ aggressive new building, leading to an unprecedented large gap in the supply demand balance. 

Worse still, some carriers continue to chase market share as their primary business objective and ignore the fact that the container shipping industry deals with an inelastic demand. 

This has resulted in an unsustainable historical low rate level. 

Despite all possible cost saving efforts, including laying up ships, returning chartered vessels, optimizing service networks and downsizing work force, all major container shipping lines were in the red for 2009 and the industry as a whole could incur as much as a record loss of $20 billion in 2009.

Some have already suffered a severe cash flow shortage and need to raise capital either from shareholders or through government rescue packages.

Stability, rational capacity growth and a reasonable return on investment that incorporates the financial risks over the lifetime of a vessel are key to the healthy development of the industry. 

Operating at an unsustainable level will simply lead to disruption of services and deteriorating service quality, impacting negatively the global supply chain and international trade.

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