INTRA-ASIA carriers ought to pursue more vessel-sharing agreements, slot swaps or joint sailings, instead of adding more capacity, or risk bankruptcy given the dangerously low rate levels, and quit competing for more containers.
"And then the supply-demand balance will be more in our favour, and we can increase rates and actually start to earn money," said chief executive chief executive Tim Wickmann of Singapore-based MCC Transport, a subsidiary of AP Moller-Maersk.
"We will see more bankruptcies if rates don't go up."
Mr Wickmann believes that "if shipping lines continue to co-operate and help each other to expand portfolios, it's not necessary to add capacity."
In spite of five to six per cent growth, freight rates in the region have deteriorated over the past year due to worsening overcapacity, reported Lloyd's List, with 60 companies plying the trade creating fierce competition.
"Rates just keep going down. It has really been quite bad in the key intra-Asia corridors," Mr Wickmann was quoted as saying.
"One of the problems is [that] there is no barrier for entry in this trade... quite often, the situation is not because customers ask for lower rates. It's because shipping lines are giving them lower rates to get more business."
Another major issue is lines' competition behaviours, which the CEO called "charity" as some lines are moving containers almost for free.
He continued, "Sometimes shipping lines just like to chase more containers. It has traditionally been the case... Despite being so profit focused, we are also sometimes tempted to add more space when demand is high," he said.
"But actually what we should think about is to raise rates."
WORLD SHIPPING
24 April 2014 - 20:50
Intra-Asia lines need to co-operate or go bankrupt with rates too low
INTRA-ASIA carriers ought to pursue more vessel-sharing agreements, slot swaps or joint sailings, instead of adding more capacity, or risk bankruptcy given the dangerously low rate levels, and quit competing for more containers.
WORLD SHIPPING
24 April 2014 - 20:50
Intra-Asia lines need to co-operate or go bankrupt with rates too low
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