It was the one industry geared for huge volume growth. From China alone, annual double-digit percentage increases in trade had been the norm in the shipping world.

But a sudden and sharp slowdown in global trade is hurting the cashflow of container shipping companies. The situation is so critical that a senior executive of Maersk Line said that the accelerating traffic decline could push a big group over the edge next year.

Maersk, the world's leading container shipping line, has slashed the rates it charges for transporting containers on its Asia-America routes and last week the Danish company said that it was laying up eight vessels amid worsening market conditions.

The eight ships, each with a capacity for 6,500 containers, will remain at anchor, probably in the Far East, until next summer. They are unlikely to represent the last capacity cut for the shipping giant, Michel Deleuran, head of network and product at Maersk, said: “We are certainly seeing a dramatic slowdown. The decline we are seeing in recent weeks is faster and deeper than what most people had expected only a few months ago. If we don't see improvements, we will be laying up more.”

The sudden drop in trade volumes on Far Eastern routes is causing havoc. Mr Deleuran told The Times that the failure of a big shipping group cannot be ruled out: “I think that would be realistic, looking at the cost figures and the uneconomic rates.”

Maersk has cut its container freight rates from Asia to the American West Coast by nearly a quarter and on Asia to Europe routes industry rates have collapsed to a fifth of what they were a year ago.

“If that does not change, one or more of the larger lines could be in financial difficulty next year. Some people could be really challenged by cashflows,” Mr Deleuran said.

The sudden drop in traffic from Asian workshops to the consumer markets in Europe and North America has surprised shippers. Further evidence of the decline emerged yesterday when Neptune Orient Lines, the Singaporean company that owns APL, the seventh-biggest container transporter, signalled that volumes had dropped by 12 per cent in November compared with the same four weeks in 2007.

Last month, Neptune Orient gave warning that it would cut its workforce by 9 per cent amid the worsening economic outlook.

China Merchant Holdings, the country's biggest port operator, said that it would curb its expansion plan because of the weakening shipping market. Fu Yuning, China Merchant's chairman, said that he expected slower throughput at the country's biggest ports in Hong Kong and Shenzhen.

The weak shipping market has put the brakes on companies that make containers, used for the avalanche of consumer products made in Chinese factories. On Monday, CIMC issued a warning in response to rumours that it had halted production: “Our company has warned of the risks as slowing demand is now a universal phenomenon due to the economic environment caused by the global financial tsunami.”

According to Mr Deleuran, traffic growth in the container market had been at the rate of 10 per cent a year every year, but the growth had suddenly declined and may have reached nil or decline.

According to shipping experts at Lloyd's List, the market was anticipating a capacity expansion of 50 per cent over the next three to four years.

“There have been a lot of lay-ups, 135 container ships are thought to be idle at the moment,” Janet Porter, of Lloyd's List, said.

Mr Deleuran said the question for the market was how much of the capacity under order had found charterers. “There are quite a number of ships under order. We are potentially seeing an over-tonnage situation in 2009.”

Maersk Line has a fleet of 470 vessels and in July the company placed an order with Daewoo Shipbuilding, of Korea, for 16 container ships to be delivered between 2010 and 2012.

Shifting world trade

World trade will shrink next year, the first downturn in global commerce since 1982, according to forecasts from the World Bank.

The fall in trade volumes is being driven by a sharp drop in demand in high-income countries and a slowdown in economic activity across the developing world.

The credit crunch is causing private investment, the most cyclical element in global trade, to dry up, but one new factor, cited by the World Bank in its annual forecast, Global Economic Prospects, is the effect of the credit drought on trade finance. Commercial bank trade credits are disappearing and companies are finding it hard to insure exposure to trade receipts.

The World Bank said there was evidence of shifting patterns of trade from consumer markets in the West to higher growth markets in the developing world.

For example, the proportion of India's exports going to the US fell from 17.1 per cent in 2004 to 15.3 per cent in 2007 but the proportion going to China rose from 5.5 per cent to 8.4 per cent.

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