containership_1Some container lines may be forced to drop out of the industry given , warns GAC senior executive Bill Hill.

Although the plunge in container volumes appears to have bottomed out, GAC vice president of logistics Mr Hill said major challenges remained on the supply side of the equation.

GAC saw its sea freight volumes drop 26% in the first quarter of this year, compared to the same quarter of 2008 - a rate of decline roughly similar to that reported by many others in the business.

Mr Hill said the drop in volumes seemed to have halted and the market bottomed out. However, global trade volumes might now remain at this level.

This scenario brings real concern on the supply side of the equation with huge numbers of ships still due to be delivered this year.

"You start to wonder what will happen when all these large containerships enter the water later this year. The capacity that is going to hit the trade is unprecedented," he said.

Mr Hill noted the decision earlier this year by Senator Lines to quit the industry completely and that others might yet be forced to nofollow.

"Maybe some of the carriers will have to drop out. Maybe it will take one or two large carriers to reach that point," he said.

He did not say which lines might be forced to quit the industry.

While GAC is being hit by lower margins in its ocean shipping logistics business, Mr Hill said it did not impact the company's overall results as GAC was able to make up for it in other businesses it operates.

In the logistics part of the business, he said GAC was diversifying further into landed operations, such as warehousing and trucking.

Overall, Mr Hill was upbeat about GAC's own business and said the first four months of the year had been very good. He put this down to diversification both geographically and in terms of its businesses, which encompass offshore marine, ship agency and logistics.

The Dubai-based company also has a strong focus on emerging markets in Asia, South America and the Middle East, all of which have been less hard hit by the global economic meltdown.

Mr Hill noted the majority of its logistics operations was focused on developing markets.

In the offshore marine business, most of GAC's vessels are on long-term contracts.

"We are not blind to what is going on, but we do see a light at the end of the tunnel," he said.

Mr Hill said they saw positive signs with more liquidity in global markets and the general trend of equity markets going up.

GAC sees itself as well-placed to take advantage of opportunities in the market when the global economy starts to pick up, although Mr Hill was playing his cards close to his chest as to what they might be.

What is unlikely is that GAC looks to a major acquisition to spur growth, which he said was not really their style.