Hoegh Autoliners Inc.

The various valid areas of importance that have been pointed to in this edition in recent years have not suddenly become unimportant as a result of the recent global economic turmoil, but now they must be seen with the additional attention that economic conditions have made necessary. Last year, we pointed to the need for government on all levels to be proactive in protecting terminal space for use by maritime commercial interests. Although there has been a reduction in the urgency related to this, the long-term trend has not changed.

As a result of the recent economic downswing, the single biggest change to be seen in our part of our industry will be the reduction in the number of vehicles being shipped to the large consuming areas in the U.S. and Europe. This will cause a tonnage reassessment to be made by all carriers in the trade, and the effects of this will be seen in all trades globally.

In addition, export-oriented regions will experience disruptions as the global market demand fluctuates, with manufactured volume experiencing fluctuations. Along with declining time-charter rates and an increase in the scrapping of older ships, some idling will occur. An increased emphasis on operational efficiency to address the new market reality will become apparent. Not all of this will be unhealthy, given slower steaming and the creation of a more efficient global fleet.

As 2008 wound down, Congress was debating an assistance package for the automotive industry. The negative effects of allowing this industry to disintegrate far outweigh any benefit to be gained by not providing an aid package. The number of people and industries that will be hurt globally is simply too much to ignore.

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