Cargo Slump Bodes Ill for Supply Chain

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A sharp drop in freight shipped across the Pacific during the past two months suggests the shipping-industry slump is about to get worse, the Wall Street Journal reports.


At the major ports of Los Angeles and Long Beach, Calif., which bring in nearly two-thirds of West Coast containerized goods, import volume fell 8.8% in both January and February compared with a year earlier, as the weakening economy, tough housing market and high gasoline prices eroded U.S. demand.


In response to slowing traffic, three of the largest global carriers — Danish shipping-giant A.P. Moller-Maersk AS’s Maersk Line, French carrier CMA CGM Group and Swiss company Mediterranean Shipping Co. — are sharing space on the same ships instead of operating their own weekly trans-Pacific shipping services, in hopes of slashing transportation costs by as much as 30%.


“These people are trying to compensate for the lack of growth by getting some of the economies into the system by moving traffic in a cheaper way,” says Mark Page, director for liner shipping at Drewry Shipping Consultants Ltd., a London maritime-advisory firm.


The ocean-freight slowdown bodes ill for railroads, delivery companies and others that bring imported goods to U.S. businesses and consumers in the coming weeks and months.


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