Europe's transport industries are still reeling from the deadly impact of the Sept. 11 terror attacks on global commerce but already there are signs that most sectors, from shipping to trucking, will be stronger a year from now. For the moment, the focus is firmly fixed on the cost-cutting and consolidation that was underway well before Sept. 11, as companies adjusted to a sharp and sudden downturn in traffic after a decade of U.S.-led economic growth ground to a halt early in the year.

The airline business has grabbed the headlines largely because it took the biggest hit from the terror attacks - traffic on the North Atlantic has tumbled 30% - and has a higher public profile than say, unglamorous barge shipping or road transport. The industry is still in turmoil following the collapse of two flag carriers, Sabena and Swissair, but there are indications that the worst may be over, as the Association of European Airlines reporting a lessening in the rate of decline in traffic volumes, even on problematic trans-Atlantic routes.Other sectors are suffering from a slower, but accelerating, loss of business as the rate of growth of world trade stumbles to barely 2% this year. Even the biggest players are on the defensive: Rotterdam, the world's largest port, has just scrapped a planned increase in harbor dues in a bid to stem the loss of cargoes, particularly containers, to cheaper and more flexible rivals in the fiercely competitive Le Havre-Hamburg range. Elsewhere, A.P. Moller, the Danish transport, industrial and energy group that owns Maersk Sealand, the world's biggest container line, has imposed a wage and hiring freeze.

The big players are using their buying power to force operators lower down the supply chain to cut their rates. Thus Maersk Sealand and P&O Nedlloyd, a rival Anglo-Dutch container line, are pressing Dutch truckers to reduce their container haulage rates to and from Rotterdam by between 7.5% and 10%, a big giveaway for a sector that is already subsisting on wafer-thin margins. But the truckers have little choice because the market is moving against them: there is a surplus of capacity on the road and this will grow when container traffic ebbs after the pre-Christmas shipping peak.

Lower trucking rates will have a domino effect on other transport modes, such as inland shipping, an increasingly important player in the container market moving over 1 million TEUs a year on the river Rhine, and the state-owned railways which are facing an uphill struggle to win back cargo from trucks and barges.

There's worse to come for Europe's shipping lines, truckers, railroads and barge operators as trade with the once dynamic East Asian tigers falters. The recession in the U.S. and Europe pales in comparison with the slump in most of the region's economies: Singapore's gross domestic product was down 5.6% year on-on year in the third quarter and Taiwan's by 4.2%, the steepest drops on record. Output has stagnated in Thailand, Malaysia and Hong Kong and is up only 2 0n South Korea, while China's export growth has slowed to zero from 30 0n 2000.

This spells further problems for the huge Europe-Far East container trades, which are already suffering from 200vercapacity, and the inland transporters that handle the delivery of boxes to and from European seaports.

Europe's tanker owners have been hit by the plunge in spot freight rates to a two-year low as growth in demand for oil this year will hit its lowest since 1984. Dry cargo rates, which closely track the health of the global economy, are also retreating fast, as spot rates for capesize bulkers on the Atlantic and Pacific have tumbled from $26,000 a day to below $7,000 in a year, with little hope of a pickup for at least another twelve months. Even cruise shipping , for so long a seemingly recession-proof business, is facing a slump in bookings.

The good news flowing from this bad news is that the transport sector has been forced to accelerate consolidation. The leading operators of modern very large crude carriers (VLCCs), mostly from Europe, have already pooled their fleets to present a united front to charterers. A group of bulk owners, including A.P. Moller, Belgium's Bocimar and Belships and the 50% P&O-owned Associated Bulk Carriers, have just followed suit, creating a pool of 75 capesize vessels ranging between 122,000 and 210,000 deadweight tons. And last week, the UK's P&O Princess Cruises unveiled a $6.8 billion merger with Royal Caribbean Cruises, creating a new market leader with a fleet of 41 vessels.

The container business also is bracing for a fresh bout of consolidation, led by European carriers such as P&O Nedlloyd and Germany's Hapag Lloyd, while European port operating firms are poised to snap up more terminals around the world.

Even the gloom-laden European airline market had something to crow about last week after Ryanair, a feisty low-budget Irish carrier, unveiled a $225 million plan to create a new hub at Hahn airport, a former U.S. military base 70 miles west of Frankfurt, to take on Lufthansa, Europe's second largest carrier, on its home turf. The British government's decision to approve a $3.6 billion fifth terminal at London Heathrow airport, and the choice of a site for a third Paris airport, underscored the bullish long-term prospects for air travel.

Europe's shipping, trucking, barge and rail industries are sure to bounce back when global trade starts to grow again. What's not so sure is which companies will be around to take advantage of the rebound.