By Shane McGinley
Middle East shipping slumped in 2009, but is expected to mount a healthy recovery in 2010.
DP World and its competitors will be hoping for an easier ride in 2010 than they received in 2009, a year in which the shipping sector was hit hard and port operators suffered accordingly. The good news is that they’re likely to get their wish.
According to analysts, the drop in imports that resulted from the slump in the construction sector and a decline in oil and gas exports hit the shipping sector hard in the Middle East last year.
“Global trade crashed by four percent compared to 2008, while the supply of ships grew by some eight percent so the number of unemployed ships increased sharply due to the collapse in trade,” said Erik Jensen, a shipping analyst with Lorentzen and Stemoco in Norway.
This led to some shipping owners getting into distress as ships were left empty and financing became scarce. This also had an impact on port operators, especially container ship ports in the US, said Jensen.
In the Middle East, the dual drop in exports and imports led to a decline in shipping rates and less traffic flowing through the region’s ports.
“The volumes of oil and gas that got shipped out of the Middle East decreased last year due to OPEC production cuts due to reduced demand from the world economy,” said Jensen.
At the same time, “imports were reduced due to the halt in the construction industry.”
This led to a sharp decline in shipping rates and Jensen said that some operators were even forced to slow down their shipping times in order to save money on fuel costs. He added that average crude oil container rates last year were only a third of what they were in 2008.
However, he forecasts that the sector will see recovery this year as global trade is predicted to grow by five percent.
“We expect OPEC to increase shipments of oil again as oil demand is recovering. We expect China to continue to grow this year and we expect Europe, Japan and the US to increase imports of iron ore for steel production and coal for electricity production,” he added.
In February, Saudi Arabia, the world’s largest oil producer, raised output by 100,000 barrels a day to 8.25m, the highest increase since December 2008, according to an analysis by the Bloomberg news wire.