Unprecedented drop of sea freight cargo during Q4 and january is not better

All data converge : exports are dropping since october. Therefore, shipping by sea is decreasing too. All the chain (production, logistic) is contaminated.

And it seems that january will not be better.

The problem is : it’s not linear. But exponential. The longer this negative trend continues, the more devastating the effects will be.

Businesses might be able to handle one, two or maybe three very bad months… but more ?

Think about the cash flow problems… the defaults… the bankruptcies… It could be the start of a freaking negative loop.

Some professionals start to say that… 2009 could be a lost year. Hope for a recovery in the first half of 2009 looks like a fantasy.

“January figures have yet to be finalised but it is generally expected to decline by the same level or even higher than in the previous two months,” said the association’s president, Suwit Ratanachinda. “The number of payment default or bounced cheques is also higher. This is unprecedented.”

Here is the whole article from Bangkok Post, with lot of data.

Traffic through Laem Chabang Port has dropped for the first time in its 18-year history in light of the global recession, with port authorities and freight operators expressing concerns over declines in cargo shipments.

Sunida Skulrattana, director-general of the Port Authority of Thailand, said throughput at the deep-sea port in Chon Buri fell 20% in December compared to the same period a year earlier. The decline at the smaller Bangkok Port in Klong Toey was even worse, plunging by nearly 30%.

Cargo shipments started to drop in October, losing 30% year-on-year in the fourth quarter, she acknowledged.

“It is something that has never happened before as volume at Laem Chabang had always been on the rise since it started operating [in 1991]
,” Mrs Sunida said, explaining that the port normally services the country’s major export items such as food, automobiles and electronics goods.

“The situation is quite worrisome because purchasing power of clients in our key export markets of the US and Europe is being wiped out. This has prompted manufacturers here to cut their production and exports.”

The country’s exports declined 14.6% year-on-year in value last month, the second month in a row after a decline of 20.5% in November – the biggest drop of Thailand in 17 years, according to the Commerce Ministry.

But the Thai International Freight Forwarders Association (Tiffa) said the decline of outbound cargoes at Klong Toey was greater, dropping 18.3% in December on shipments of 53,130 containers. The figure was higher than the decrease of 17.8% in November.

Exports from Laem Chabang shrank 9.8% last month to 203,540 containers after falling 6.5% in November, with volume at Lat Krabang also off 24% to 63,360 units compared to 11.9% in November.

“January figures have yet to be finalised but it is generally expected to decline by the same level or even higher than in the previous two months,” said the association’s president, Suwit Ratanachinda. “The number of payment default or bounced cheques is also higher. This is unprecedented.”

Mr Suwit said Tiffa estimated overall port traffic would sink by 25% in the first quarter from 2008, leading to a downturn through the whole of 2009.

Only 60% to 70% of local shipping capacity is now being utilised while globally, 200 vessels are parked because they have nothing to carry, he added.

The hardship poses threats to a number of workers, he said. “We have to focus on cost cutting until the demand recovers, which is unlikely this year.”

Cost cutting ? To absorb such violent and lasting shock ? Good luck.

Anyway. Is this a surprise ? Of course not. People who were following the Baltic Dry Shipping Index knew it would come to Thailand.

Only the Lalalanders and the readers of Lewis Carroll were thinking that Thailand could be… insulated.

1 Response to “Unprecedented drop of sea freight cargo during Q4 and january is not better”


  1. 1 World Link International 11 February 2009 at 10:57 pm

    No, this is to be expected, a reflection of the current world economic climate. With the first recorded recession in Thailand since 1997, times are certainly going to be tough for the country as a whole and not just in the areas of sea freight and exports. Unemployment is going to be a big issue this year, across the world.


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Thailand Crisis

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The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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