As far back as September 2009, there was a highly noticeable uptick in U.S. container shipping volume. Then in October, shipping observers spoke of rising freight rates being pushed by ship owners.

As rates rose, there then came a rumor that shipowners were beginning to pull substantial numbers of ships out of dry dock, due to a major pick up in container trade demand they were experiencing.

Shippers started to complain about a shortage of ships to carry their growing number of goods.

Two weeks later the rumor above was then confirmed, ships were indeed being put back into service in large numbers:

Fearnley Fonds, 16 Mar 2010:

According to AXS-Alphaliner, the idle fleet has been further reduced over the last two weeks, from 495 vessels of 1.24m TEU to 474 vessels of 1.22m TEU (9.3% of fleet capacity) currently. AXS-Alphaliner expects lower idle count going forward, as new services will be launched on the Asia – Europe trade (capacity on this route expected up 7%) and there is also a pickup in demand for smaller ships to service intra-regional trades.

Moreover, a major rebound wasn't just seen for U.S.-Asia (Transpacific) trade. Asia to Europe was seeing strength as well, with higher volumes and most importantly higher rates:

And even now, despite the warnings ahead of time, containers are piling up at ports because trade growth jumped far quicker than the industry adjusted itself for.

Just be aware that there are still risks.

Maersk, for one, isn't quite sold. They think the strength of the rebound can't be sustained.

But really the risks mostly have to do with the industry expanding its shipping capacity too quickly in response to surging trade demand.

In terms of what this all means to the rest of us, the growth in trade demand is real and good news. Even if shipping companies end up getting too excited and bringing out too many ships, well ahead of further trade growth.

Because, it's important to remember that a sharp drop-off in trade called the U.S. economic crisis back in 2007:

Myself, at Citi, June 2008:

Back in 3Q07, Asia-US container volume weakness was a decent indicator of hard times to come. We believe that the latest further deterioration in US and increasingly European data means that for container shipping, “We ain’t seen nothin’ yet”.

Latest data based on an aggregate of five major US west coast ports shows import volumes down 8% year to date for 4M08. 1Q08 PIERS compiled data for the US overall shows a similar trend with 6M trailing volume down 2.5%. Any way you slice it, the US demand slowdown is worsening.

Thus a sharp rebound in trade demand calls a recovery.

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