Tufton executive predicts 2 more years of shipping slump

Global- According to a Tufton Oceanic Ltd executive, the shipping industry will continue in decline for at least two more years as the global fleet expands and a slowing world economy saps demands.

Andreas Vergottis, research director at  Tufton said in an interview, "Shipping is the best industry on the way up, but is [also] the worst industry on the way down; the expansion of the global fleet is a problem we are dealing with at a time when demand doesn't seem to exist."

Vergottis said that since 1950, there had been nine downturns in the cycle, with the current one being one of them. On the eight previous occurrences, the minimum length of the downturn was two years while the maximum lasted five years. As such, Vergottis believes the current cycle in the shipping industry is looking bleak at the moment.

Neptune Orient Lines Ltd., echoing similar views, said that traffic declined for the first time in almost three years because of slowing demand for shipments of Asian-made goods.

"The credit crunch accelerated the problem that was coming anyway due to overcapacity," Vergottis said. "It was looming for 2009 and 2010. The credit crunch killed demand for 2008 and really accelerated by 12 months what was coming anyway."