Falling merchandise exports are among the factors contributing to a crisis in the global shipping industry.
The Panama Canal (pictured) is a conduit for 5 per cent of world maritime commercial traffic. Its expansion, formally opened on 26 June, was designed to help the shipping industry cope with continued growth of world trade by letting “mega-ships” carrying up to 14,000 containers traverse the canal.
Instead, the expansion arrived with the world shipping industry trying to cope with the challenge of carrying less.
World Bank figures say merchandise exports fell by US$2.54 trillion in 2015, to US$16.58 trillion. That fall is almost as large as the post-financial crisis fall between 2008 and 2009, and is a long way from the 10 per cent annual growth that preceded the crisis. Fuel exports fell sharply, too.
The result: shipping companies are breaking up or breaking down.
First came Hanjin Shipping, the world’s seventh-largest container shipping line. Hobbled by debt of more than US$5 billion, it filed for bankruptcy in August. The next month, AP Moller-Maersk announced that it would break itself into two companies, one an energy business and the other a transport and logistics business.
CEO Soren Skou partly blamed “nearshoring” – businesses outsourcing their work to nearby countries, instead of countries across the ocean.
Meanwhile, a 2015 report from the OECD’s International Transport Forum says efficiency gains from mega container ships have been steadily declining, and that making ships larger could actually raise the cost of transporting goods. An industry used to more and bigger may now have to find other ways to survive.