Container rates sinking fast, so why the third dredge?

The news is bad for the PoMC and its channel deepening fiasco. Container throughput is spiralling downwards and imported car numbers have dropped a massive 33% . 


  1. On-line economics journal Business Spectator recently reported that shipping lines have cut thousands of jobs and mothballed ships to cope with overcapacity and falling trade volumes as more economies fall into recession, depressing demand for goods. Freight rates for cargo have dropped dramatically and the three biggest container shippers have all cut several vessels and routes from service. (Maersk chief doesn't see shipping recovery before 2010 BS 13th January 2009)

2.      On 15th January 2009, reported: "More disturbing is a report in the shipping newspaper, Lloyd's List, that spot freight rates on the Asia-Europe trade have fallen to zero. That is, the volume of container trade between Asia and Europe has collapsed so much that shippers are prepared to carry boxes for nothing just to keep their ships operating, in the hope of making a few pennies from bunker fees. Ambrose Evans-Pritchard in the London Telegraph says this is like an airline giving away spare seats in the hope of making money from meals".

3.      ABC Radio National’s Country Breakfast program January 31st reported that shipping costs are falling with less demand for containers. The report also said that shipping traffic is less congested as the credit crisis forces the bulk movers out of action – with the biggest impacts being felt in the container trade.

Teresa Hatch, from the Australian Shipowners Association, said operators are lowering their costs to get what jobs they can.

"And in a lot of cases, if a ship is just relocating to somewhere where they're better positioned to maybe get a cargo next time, they'll do that at their own cost, rather than having anyone else wearing that cost.” So there's a lot of cut-price shipping going on at the moment" she said.

Sounds like the industry is on its knees doesn’t it? It begs the question whether local communities should be expected to continue offering up our funds and irreplaceable assets for a volatile industry like global shipping just on the hunch that perhaps sometime in the future it might all come good again for them and the Port Corporation. That’s the logic currently being applied by Mr. Brumby and the PoMC, still clinging to the “business as usual” mindset. But business as usual isn’t going to cut it as the global economy cools and a carbon constrained future bears down on us - in fact it is the cause of the problem.

The elephant in the sitting room question is - Why spend the remaining $500,000,000+ allocated for channel deepening when we clearly don’t need to cater for bigger ships in the near to mid future and likely won’t need to at any time in the future. And – why spend another $8.7 million to accelerate dredging by a mere three months? 

We wonder how the PoMC is going trying to collect the $32+ container levy they introduced last year in an attempt to get port users to pay for some of the costs of the project.  The channel deepening levy was unpopular when the container business was booming - especially with the numbers of port users who are perfectly happy to send and receive goods on medium sized ships, and who say they do not need channel deepening and certainly shouldn’t have to pay for it!

Isn’t it time we told the shipping lines to purchase ships that fit into our ports, rather than us having to keep trashing our rivers and waterways at the whim of a few overseas ship owners who think “big is always best”?   


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