Container trade slump hits home

01/04/2009 - 22:00

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FREMANTLE Ports has revised its budgets and is closely monitoring current accounts and spending in light of tumbling trade figures and gloomy international forecasts.

Container trade slump hits home

FREMANTLE Ports has revised its budgets and is closely monitoring current accounts and spending in light of tumbling trade figures and gloomy international forecasts.

Along with many of the world's shipping and trade organisations, Fremantle Ports has experienced significant falls in trade during the past three months.

Specifically, container trade has dropped off considerably this year.

Total port trade, which includes container trade, bulk cargo trade and non-containerised, non-bulk trade (otherwise known as break-bulk trade) fell by more than 5 per cent in December compared to the same month the previous year.

It dropped further in January, plunging nearly 10 per cent, but made up some ground in February, although figures were still lower than the same period the previous year.

Container trade (imports and exports) figures fell by almost 13 per cent last month, twice the drop experienced in January.

However, for the eight months to the end of February, total port trade (including imports and exports) is up by 0.8 per cent compared with the same period last financial year.

And container trade volumes to the end of February are up by 2.4 per cent compared with the same period last financial year.

While this seems like positive news, one of the world's largest stevedoring companies, DP World, said last week there was no end in sight to the decline in activity caused by the global downturn, after reporting an 8 per cent drop in trade volumes in the first two months of 2009.

Despite after-tax profits of more than $600 million, DP World chairman Sultan Ahmed Bin Sulayem said the volume deceleration of the last quarter of 2008 has continued into early 2009, and showed little sign of easing in the foreseeable future.

"The current decline in global trade and associated falling utilisation rates has resulted in significantly reduced demand for new capacity in the near term," he said.

"In response, we have deferred approximately 50 per cent of our planned capacity expansion plans until such time as higher utilisation rates return."

And in an annual assessment of global trade, economists from the World Trade Organisation suggest the collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly 9 per cent in volume terms in 2009, the biggest such contraction since World War II.

The WTO believes contraction in developed countries will be particularly severe, with exports falling by 10 per cent this year.

And recent reports of hundreds of vessels anchored in waters surrounding Singapore's port highlight the reduced global shipping activity.

Despite this pessimistic news, however, Fremantle Ports expects container trade will come back to be on a par with or below the 2007-08 situation over the next few months.

Chief executive Chris Leatt-Hayter said that, in view of the expected downturn in some trades, Fremantle Ports was closely monitoring its expenditure for the remainder of the current financial year.

"It is expected that we will continue to feel the effects of the global economic crisis in the 2009-10 financial year and we have revised our budgets accordingly," he said.

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