Freight Costs

Sept 07, 2009 (LBO) – Sri Lankan shippers say they will resist efforts by international shipping lines to raise freight rates this month at a time of over-capacity by switching to smaller lines if necessary. Global lines led by Maersk, the world’s biggest container carrier, have announced rate hikes from September 1.

CMA CMG and Evergreen have also announced rate hikes which are expected to be followed by other loss-making lines, desperate to end their losses.

The abolition of the conference system or cartels among lines by the European Union means carrier can no longer collude to set rates on trade routes.

But Sri Lanka Shippers’ Council chairman Randolph Perera said the lines had instead started announcing rate hikes on an individual basis.

He said there was no reason for freight rates to rise when there was huge over-capacity in the container trades with many ships being laid up by lines and others struggling to fill their holds.

The problem was caused by the slump in global trade owing to recession and an over supply of ships.

Perera said the ability of lines to make the freight rate hikes stick would depend on market forces of supply and demand.

“Although lines have