Mr CC Tung, one of the most respected figures in world container shipping, has predicted years of difficult conditions for the industry if government economic stimulus packages fail to produce a quick upturn in the world economy.

Mr Tung also chairman of Hong Kong’s Orient Overseas International said that the board was managing the company in the expectation of a continuing deterioration in rates paid for each container shipped throughout 2009, after already steep declines in the last quarter of 2008.

His predictions are the latest gloomy sign for the industry, which enjoyed 5 boom years until 2007. The sector is now suffering plummeting demand and an oversupply of ships as vessels ordered during the years of growth are delivered. Container ships, which mainly move manufactured goods, depend on western countries’ demand for Asian-made consumer goods.

He said that there could be a recovery in demand towards the end of the year if worldwide stimulus packages succeeded. He added that "If there is only a gradual improvement in the global economy during 2010, then it is likely that conditions in the container shipping industry will take longer to improve."

Growth in container volumes for the year overall was 5.1%, but only 1% in the second half. The average proportion of space filled on each sailing, which is critical to container lines’ profitability, was only 77% over the year against 80% in 2007. Pre tax profits for the group for 2008 fell to USD 304 million against USD 592 million in 2007, partly as a result of a USD 25 million write down in the value of its Wall Street Plaza property in New York. Revenue rose to USD 6.55 billion from USD 5.65 billion.

(Sourced from The Financial Times)