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Editorial: Painful choices

Editorial: Painful choices



   To be blunt, the entire shipping industry is weathering difficult times.

   Liner carriers, suddenly bloated by new larger vessel capacities, have started taking evasive action to avoid sinking in the financial sea of red.

   Neptune Orient Lines Ltd., the Singapore-based parent company of container shipping line APL and APL Logistics, said in November that it will slash its workforce by 1,000 – mostly in the United States – and relocate its regional headquarters in Oakland, Calif.

   Maersk Line, which started a major corporate overhaul in late 2007, announced in early December that it will lay up eight 6,500-TEU ships from December to May/June 2009, predominantly in Asia. 'Our decision follows the recently announced changes in our Asia/Europe, Asia/Central America and transpacific service networks. This resulted in surplus vessel tonnage, which we will not redeploy in our service network,' the Danish liner giant said in a statement.

   Third-party logistics services providers, while generally reporting strong earnings over the past two years, will likely feel the pinch of the global economic meltdown as shippers of all sizes attempt to cut their losses. Slow sales obviously mean less freight to manage.

   Intermodal and truck transportation providers know all too well the hardship of these slackening cargo volumes, forcing hundreds of small owner-operators, and some large outfits, to shutter in 2008. There will be certainly more headed in that direction.

   With reduced revenues, government officials across all levels will announce delays, perhaps lasting years, of much needed port and transportation infrastructure repairs and upgrades.

   Even publications that cover the industry won't go unscathed and will need to make painful choices to keep themselves afloat through the crisis.

   This recession has left no aspect of domestic and international business untouched, and may indeed go down in the books as one of the severest in modern history. How long the hard times will last is anyone's guess. Some economists point to the end of the year, while others say 2010 or longer. The inescapable fact is that there will be casualties along the way.

   Unfortunately, when survival mode kicks in within the business world nerves fray, relationships whither, employee morale slips, and the risk of wrongdoing heightens, all of which come back to haunt when the economy begins to rebound.

   Thus the shipping industry needs to use this tumultuous period to figure out exactly what aspects of the business are truly sustainable, reduce inefficiencies, maintain the best partnerships and practices, and not lose sight that things will eventually get better.