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Trade protectionism could sink shipping industry

Published 06/09/2009, 08:59 AM
Updated 06/09/2009, 09:08 AM

* Industry worried about protectionism-Moeller Maersk

* Gov should stimulate global demand - deputy minister

* Optimistic on demand, pessimistic on the market - DVB Bank

By Aasa Christine Stoltz

OSLO, June 9 (Reuters) - Any rise in trade protectionism could sink a shipping industry already struggling during the global downturn, shipping executives and officials said on Tuesday.

As the global economy shrinks, some countries are considering measures to prop up their economies by limiting imports, which would hit world trade and the shipping industry, which has seen a sharp fall as the crisis grew from late 2008.

"Protectionism tends to sneak in here and there, and therefore we have to keep an eye on it," Knud Pontoppidan, senior adviser at Danish shipping group A.P. Moeller Maersk told Reuters on the sidelines of a shipping conference in the Norwegian capital.

"When ... (countries) are taking national measures, they will tend to favour their own solutions and that may be detrimental to world trade," he said, adding that this is a "hot issue" for many governments.

Pontoppidan said the rise of protectionism has been highlighted by ship owners' groups and by chambers of commerce.

Some countries, such as Norway and Denmark, which have small open economies dependent on exports, have also lobbied hard to prevent any rise in barriers to global trade.

"It is extremely important that national governments take measures to stimulate demand and world trade," Norway's Deputy Trade and Industry Minister Rikke Lind told the conference.

"Governments must resist protectionist measures," she added.

DVB Bank, a unit of German state-owned development bank KfW and a big shipping lender, said its outlook for global shipping remained weak and could deteriorate further if a new wave of protectionism swept the globe.

"Let all the politicians be clear that protectionism can kill international trade just now," said Dagfinn Lunde, a board member at DVB Bank.

"It is likely that if 2009 is very negative, and I will not be surprised that 2010 is also very negative," he said.

Lunde had an optimistic view on demand moving forward, but said that a large new building programme inherited from the boom years earlier this decade would limit the upside for shippers.

"I have a very pessimistic view on the market due to the extreme oversupply we have seen and which will be coming to the market in the next few years," he said.

The Norwegian government mentioned estimates that say up to one-third of the newbuilds will be cancelled due to the economic crisis and said this period could also be an opportunity to phase out older ships.

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