Yasumi Kudo, the president of the Japanese shipping group NYK, in a speech marking the company’s 125th anniversary, candidly admitted that the economic downturn has produced the biggest deficit in the company’s history. He was hopeful that NYK would show a profit by the end of this fiscal year, but was quick to point out that “it would be a mistake to claim the containership business has become a fully sustainable business model”.

Because of the steep fall in cargo traffic during this recession along with the extraordinarily sharp surge in oil prices, he said, almost all containership operators found themselves with no alternative but to resort to slow steaming and ship lay-up.

“As usual though,” Mr. Kudo stated, because of peak season cargo increases “some containership operators have been quick to explore the possibility of expanding shipping capacity at a pace faster than the increase in cargo traffic.” On the other hand, he added, because of a serious concern for the unexpectedly slow recovery in European and U.S. cargo traffic, firms that remained skeptical about the increased cargo movements continued to maintain a cautious stance against increasing shipping capacity.

“Moreover, whether or not the containership business can be transformed into a sustainable business model will depend on containership operators voluntarily choosing to lay up ships according to shipping capacity during the next slack season.

“The problem, however, is that even if all operators resort to ship lay-up during the next slack season, it may not be truly possible to expect such a measure on a permanent basis,” he said. –

Mr. Kudo is the latest containership official to question the “sustainability” of the containership industry. A half-dozen years ago – when wildly imaginative growth projections were being thrown around by optimists – a handful of sensible officials and consultants were questioning the industry’s love affair with mega-ships. ZIM’s Tommy Stramer, you may recall, even wondered if those over-sized giants might one day be looked upon as nothing more than “white elephants”.

But carriers were not deterred and larger and larger mega-ships continued to be turned out, in spite of the acquisition costs, the limited number of ports equipped to handle them, and the difficulties encountered in maneuvering and maintaining the giants. But no matter. The corporate fanning of feathers was the only justification ship owners really needed.

Now, because the predicted growth didn’t happen, they speak of “slack seasons”, “slow-steaming”, “lay-ups” and “cancellations of newbuilds”. In fact, things are getting worse with every passing day, and because people – unemployed people – don’t have the money to demand goods, there will be fewer “slow-steaming” ships at sea and more and more vessels in lay-up.

“Sustainability”? … Impossible without the job opportunities that only shipbuilding can guarantee.