The credit crunch is likely to clamp down severely on world logistics growth, according to John Luke, global head of shipping for KPMG. Noting the tightening financial market already caused a steep decline in freight rates over the past few months, he warns there may be worse to come.

“The seizure of the credit markets has lead to a tightening of the credit available for the day to day operation of the sector,” he observes. “Letters of credit, or trade credit, required to finance individual cargos, has dried up because of the financial sector crisis.”

Even before the collapse of freight rates, he says questions were being asked about the bankability of the new building order book. As noted in a previous article, the UK’s Drewry Shipping Consultants report some 65 new ships in excess of 8,000 TEUs will launch in the next two years, despite slowing demand. The economic impact will be felt not just by ship owners, says Luke, but also by the shipyards.

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