Shippers slam liner rate hikes

7th-Feb

Taken from http://www.ifw-net.com

"Shippers slam liner rate hikes

Neil Madden | Tue, 7 Feb 2012

Logistics trade body EVO claims Asia-Europe rate increases defy supply and demand

Dutch shippers organisation EVO has slammed the latest round of freight rate hikes on Asia-Europe trades.

Given the significant over-capacity in both vessels and containers, EVO finds the near-universal rise in rates “illogical” and suggests the new prices should be scrutinised by European authorities.

“Prices have been low precisely because of the large increases in (shipping) capacity, for which carriers and shipowners are (entirely) responsible,” said an EVO spokesman.

The shippers group added it assumes the European Union will watch closely this “unprecedented” market move and intervene “if irregularities come to light”.

In recent weeks IFW has reported that Hong Kong-based Orient Overseas Container Line (OOCL) will hike freight rates by US$200 per container for cargo moving from North Europe to Asia from 15 February, while Danish carrier Maersk Line is raising its rate on the Asia-Europe lane by $775 from 1 March.

Hapag-Lloyd has also announced an increase of $750 per teu from East Asia (excluding Japan) to Europe, targeted for 1 March.

And CMA CGM has announced increases on most trades between February and March, according to shipping industry sources.

“This is an increase of almost 100 percent,” said an EVO spokesman, referring to Maersk’s move.
 
In quick succession rate increases have been instigated by carriers, including Hapag Lloyd, MOL, NYK, MSC and CMA CGM, which collectively control more than 60% of Asia-Europe trades.

Shipping companies cannot justify such a price increase in the current market, according to EVO.

“Shippers know the container market inside out. There is now an oversupply of vessels and containers compared to the supply of goods to be transported, the logic of which dictates that market prices fall.

If companies, without exception, actually increase prices in such a market, then something is just not right.”

EVO accuses the carriers of forcing shippers to pay “unnaturally high prices”, adding that it is significant that smaller carriers have not yet tried to force through rate increases because of the current supply and demand situation.
 
Many container lines are understood to be operating at a loss, while some analysts have suggested that collectively, the liner industry could lose as much as $5 billion this year."
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