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Hamburg wobbles, does not fall (yet)

Is shipping slower in German city's port, or is it just the season?

General view taken from a container bridge shows the Container Terminal Burchardkai at Hamburg harbor Jan. 14, 2008. (Christian Charisius/Reuters)

HAMBURG — There's a storm coming, and in this great port city the usual nautical metaphors apply: They are battening down the hatches and hoping to ride it out at anchor. But there has already been some heavy damage sustained.

Hamburg is the industrial hub of Europe's biggest economy, a center of shipbuilding and aerospace and the entry port for nearly 10 million shipping container units in 2007. By comparison, the largest port in the U.S. — Los Angeles — handled 8.3 million units in 2007. The world's largest port, Singapore, handled almost 28 million units.

Last month the bank that financed much of the port's development and modernization over the last two decades, HSH Nordbank, had to be bailed out by the regional governments. HSH Nordbank had been unable to resist getting in on the global market in securitized risks. In 2008 it lost 2.8 billion euros, about $3.5 billion. The governments of Hamburg and Schleswig Holstein are covering that loss and making 10 billion euros available for further borrowing. Eleven hundred jobs at the bank will be cut, a little more than a quarter of the work force.

But those losses are not being felt yet in the city center.

One of the characteristics of this economic crisis is how much of it is still something that's read about rather than experienced. Certainly that is the case at the Box Prinz cafe, just off the Reeperbahn, overlooking the harbor. A sign on the wall asks, "Are you very bored? Have too much money?" It then invites customers in for happy hour.

Claudia, who owns the place, makes a double espresso for a visitor, and says that so far things haven't changed too much for her business. "I heard some expensive restaurants closed," she said without a trace of schadenfreude. Her own business, mostly lunch time trade and evening drinkers, is doing OK.

OK is a relative term. As recently as 2005 the official unemployment rate in Hamburg peaked at 10 percent. It had been falling ever since — until the last three months.

It's not clear how long the worst will be avoided. Unofficial statistics from the last quarter of 2008 and the first two months of 2009 show a dramatic decline in container traffic.

According to Sylvia Stiller of the Hamburg Institute of International Economics, in the first half of 2008 container traffic showed 2 percent growth over the same period in 2007. By the end of the year traffic was down by 1.5 percent and shrinking dramatically. It is as if overnight Hamburg's share of world trade simply stopped.