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What happens to the world when its workshop stops working? China’s January trade figures, released on Wednesday, were significantly worse than feared, even allowing for a longer New Year hiatus; exports to the US were down 10 per cent year-on-year, and to the European Union down 17 per cent. The plunge in shipments to neighbouring producers was even steeper: down 30 per cent to Korea and 35 per cent to Hong Kong. No wonder that numbers this week from Singapore’s Neptune Orient Lines, south-east Asia’s biggest container carrier, and STX Pan Ocean, Korea’s biggest dry bulk specialist, have been so gloomy.

The problem is that shipping firms are about as agile as their 90,000-tonne vessels. They cannot reconfigure their businesses fast enough to adjust supply to much lower levels of demand. Nol expects a loss for the full-year 2009, with little respite in 2010; its net profit for 2008 tumbled 84 per cent to $83m, after a fourth-quarter loss of $150m. STX turned in a quarterly loss of $95m, after the Baltic Dry Indexfell 89 per cent, its biggest quarterly drop.

Operators are taking the usual snap remedies: take vessels out of service (lay-ups of container ships have quadrupled since the end of October), cut routes and freeze new orders. (For the first time in the 53-year history of container shipping, four months have now gone by without a single new order for new vessels, according to broker Howe Robinson.) But existing commitments still weigh heavily – operators are due to take delivery of ships with 1.1m new container slots this year, even though utilisation rates suggest 200,000 fewer slots are actually needed. Delaying orders is possible, at a cost, but much of this capacity is nearing completion. Either operators take the hit or the yard owners do. A wave of bankruptcies is only just beginning.

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