Asia's Container Shippers Hit Bad

Caught this newswire.

• SINGAPORE (Dow Jones)--Asia's container shippers are headed for an unprecedented shakeout, illustrating the dramatic collapse in world trade that has combined with overcapacity to bring freight rates to their lowest level in eight years.
  
  Many shippers have idled scores of ships and re-negotiated new ship deliveries.
  
  Now, takeovers and bankruptcies loom even as companies and analysts try to gauge the bottom.
  
  In the latest sign of distress, two major alliances of shippers Tuesday announced an indefinite suspension of their joint services from Asia to ports in the Black Sea and the Mediterranean, including Georgia, Ukraine, Russia's Black Sea ports, Turkey, and Israel.
  
  The New World Alliance, made up of Singapore's APL Ltd., a subsidiary of Neptune Orient Lines Ltd., Japan' Mitsui O.S.K Lines Ltd., and Hyundai Merchant Marine Ltd., and the Grand Alliance that includes Germany's Hapag-Lloyd, Malaysia's MISC Bhd., Japan's Nippon Yusen Kaisha, and Hong Kong's Orient Overseas Container Line together had eight ships, each with a capacity of 5,000 TEU, plying the route. Industry executives say the Asian container shipping industry could shrink by as much as a third over the next four-five years, if the global economy doesn't worsen.
  
  "We've never seen it so bad before. Quite frankly, some won't survive," Ron Widdows, chief executive of NOL, the world's eighth-biggest container shipper in terms of capacity, told Dow Jones Newswires.
  
  In December, NOL said it would lay off 1,000 people worldwide. For the third quarter ended December, the company posted an 82% net profit decline on year and flagged an operating loss for the fourth quarter.
  
  About two thirds of the world's top container carriers are Asia based representing slightly more than half of global capacity, which is measured in twenty-foot equivalent units, or TEUs.
  
  Singapore is the world's busiest container port closely followed by Shanghai and Hong Kong.
  
  According to industry estimates, shippers operating the Asia-Europe route, the busiest for container shipping among continents given its numerous ports, expect to lose a combined $5 billion this year.
  
  In September, privately owned Shandong Yantai International Marine Shipping Co., a major player on the China-Japan container route, and South Korea's C&Line Co. also privately owned, ceased operations.
  
  Analysts say whether or not a company is able to survive the downturn will depend on its debt levels, ability to manage operating costs, and government support.