Newsroom Blog
MASSIVE investment in a new generation of containerships has been driven by an extraordinary shift in trading patterns over the past five years. As China embarked on what one pundit has described as the biggest wealth creation programme of all time, so manufacturers in North America and Europe rushed to set up factories on the other side of the world.
Rockbottom production costs, and equally low freight rates enabled goods to be made in China, shipped thousands of miles, and still be sold at ever decreasing prices that have kept a lid on inflation.
But can this formula work for much longer, given soaring fuel prices that are playing havoc with business plans of industrialists and shipowners alike?
Vast sums of money have been pumped into fleet expansions on the premise that globalisation was here to stay, and that ships of ever-increasing size would been needed for the foreseeable future to cater for the insatiable demands of western shoppers.
But what if the cost of transporting merchandise over these vast distances ceases to make sense as consumer spending slows and Asia loses its cost competitiveness? Could manufacturing be shifted back closer to the marketplace, rendering many of these leviathans redundant?
That is not likely to happen overnight, but neither should such a possibility be ruled out. The global economy is entering uncharted territory on several fronts, whether it is rocketing energy prices, stiffer environmental standards, a slump in high street spending, or that post powertful of forces — a shift in sentment.
Comments (1)
Comment by
Mr Barry Parker
- Friday 13 June 2008
An unfolding correlation is the whole question of routes through the Northwest passage which would shorten Asia/ Europe distances dramatically. The present megaships would not be suitable for ice navigation. I attended a fascinating presentation where the speaker suggested that new "HUB PORTS" could be developed in Alaska and in the northern fringes of Norway.
So, maybe some of the present orders might be converted into ice class container vessels? Ms. Porter's point about high fuel prices changing the whole dynamic of trade flows is spot on.
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