Pre-WW Two, every “Home Boat” was crewed by British sailors and the stern of the ship proudly displayed its English name and below it Liverpool, London or Southhampton as the port of registration. After the war, slowly but surely the crews were drawn from Goa in India and the port of registration changed to unknown ports such as Monrovia. In the good old days, every merchant ship was built in Belfast, Newcastle on Tyne or on the Clyde. Once the Japs, through the Marshall Plan, built their shipyards in the fifties it was goodbye to British shipbuilding. Why? Shipping lines were well versed in how to cut costs and little value was ever placed on doing the right thing. Containerization had its affect on the future of shipping but for British companies South Pacific exports and imports were tailor-made for that radical change and so they were able to truly prosper until the conference cartel was broken twenty odd years ago.

Fast forward to today and shipping is on the brink of collapse. From a tradition lasting centuries of shipping lines truly ruling the waves, from Maersk Line down, the future of the industry at it currently stands is now uncertain. The problems inside the airline industry are minute by comparison. The boom times of the new millennium have come to a sudden halt. Just like the A 380, megaships are no longer needed and Korea is still pumping them out by the dozens. One way trade has killed shipping. There is no money to be made out of shipping empty boxes to China to be loaded up with low value junk and where the customer demands a rate in keeping with the low value of the rubbish he is exporting!

Last week it came to a head when the trans-Pacific carriers got together in Hong Kong and all concluded immediate action needed to be taken in order for them to survive the current crisis. As from January 15th, all eastbound freight from China will incur an “Emergency Revenue Charge” of up to $505 per container and $8.00/m3 for LCL. Five years ago they were masters at applying ROC’s (rip off charges!) and now what do we see? The ERC, Emergency Revenue Charge! Thanks to the recession and assholes like Wal-Mart and Chinese exporters, the shipping industry has been brought to its knees. Wow! When I think of Mum and Dad driving my brother and me to Waikanae Beach at night for a Wise’s ice cream and to see a beautiful Blue Star “home boat” brightly lit up in the bay, I can remember my thoughts of awe that Gisborne, NZ, must be the epicenter of the world; because big ships were loaded up with frozen meat and wool for Mother England. Today, ironically, not one English shipping line remains or exists and the remainder of the world’s carriers are all about to go broke; my goodness the world has certainly changed.

Greed brought about the demise of shipping as I nostalgically remember it, only to be replaced by everything, including this very industry, literally moving down to the lowest common denominator. Isn’t amazing we now see a shipping surcharge applied to stave off the total collapse of a once proud industry? Going a step further, and holding back my sarcasm as best I can, don’t we have so much to thank China and other miserable bastards like Wal-Mart for?

Last week I mentioned 227 freighter aircraft, mainly wide bodies, are sealed up (protection from the hot sun and sandstorms) in the Mojave Desert awaiting their fate. Like the ships, is their latest port of call only temporary before they are scrapped for the metal and usable parts? Shipyards throughout Korea and China have no cargo ship orders on their books and when the last ships are delivered by the end of next year, Ulsan, South Korea’s shipbuilding hub, will soon resemble Glasgow Scotland and just like Glasgow, shipbuilding could well become an extinct industry. When the promoters of globalization figuratively forecast a “shrinking” world, after just a few years of experimentation, they had no idea it would literally take place!

Most major airlines have been teetering on insolvency for years. The first Gulf War nearly twenty years ago handed them their initial shock. Shipping Lines have been consolidating for the past thirty years with two maritime nations, the United States and Great Britain losing their fleets altogether. The world’s shipping lanes are dominated by five steamship lines. In less than a year, their balance sheets have gone from showing profits and good liquidity to where they now look exactly like their airline brethren. There is no question that if the current trends continue, Maersk will go the way of Citibank and become a Danish-owned government enterprise. The simple truth is transportation is hunkering down for different times ahead. China can bullshit us as much as they like, but those forty odd million workers they sent packing back to their families in far away places where rice has been tended to the same way for centuries are not returning to the industrial cities of the east. Those shuttered factories will scrapped, just like the 500 hundred ships moored between the Singapore and Malaysian coasts and the 227 plus planes rotting in the Mojave Desert of California.

The era of excess, particularly in the United States is over and the practically minded businessmen, such as transportation CEO’s are bracing themselves for changed times ahead and actually doing something about. They are also well aware as times do improve, nationalism, bolstered by a little protectionism, can only lead to less demand for shipping space. Capacity will continue to be reduced until matched by the supply of goods. For forwarders, we have one ray of sunshine on the horizon; as capacity shrinks rates will rise. The higher the rate, the better the margin and the more money we make!