Freight Rates

Nov 23, 2009 (LBO) – Sri Lankan shippers are confronted with an increase in transportation costs to and from their markets with loss-making global carriers raising freight rates or announcing rate hikes from next year to restore profitability. Some lines have also withdrawn vessels and services to and from the region and introduced ‘slow steaming’ in an effort to reduce over-capacity in the container trades and to cut fuel costs.

Among the lines that have already announced rate hikes or ‘rate restoration’ as they are called, are Maersk, the world’s biggest container shipping line and a big customer of Colombo port, Mediterranean Shipping Company, Evergeeen, Hapag-Lloyd, and China’s COSCO Container Lines.

The rate hikes are being announced by shipping lines individually after shipping ‘conferences’ or cartels of lines were banned by the European Union on anti-competition grounds.

The shipping lines have argued that they need to raise freight rates in order to maintain their services to the region’s shippers after a sharp fall in rates caused by over-capacity in recent months.

The over-capacity problem was caused by a huge building spree that shipping lines went on in recent years during the boom in shipping when freight and