Liner Concentration

Feb 09, 2012 (LBO) – Shipping lines are coming together and concentrating their power to survive a downturn in trade that is causing losses but a recent freight rate hike might not last, Sri Lankan shippers have been told. In 2012, 253 vessels with a total capacity of 1.4 million TEUs (twenty-foot equivalent container units) are come on stream of which 55 ships will be larger than 10,000 TEU capacity, Dissanayake said.

“It will be a case of survival of the fittest for lines in 2012. The global fleet of 8,000 TEU ships will grow by 20 percent while overall demand growth is only 5.4 percent.”

Some freight contracts on the Asia – Europe route at 1,100 US dollars for a forty-foot container is below the break even level for shipping lines, he said.

Dissanayake said cash reserves of lines will run out in the second half of 2012.

“Unless shipping capacity is reduced, freight rates will continue to dip. The number of idle ships or those in lay-up will continue to rise.

“There is a strong possibility of a further consolidation of lines through mergers and acquisitions.” “The top 20 carriers now control 84 percent of ship board capacity – there is a concentration of power,” said Parakrama Dissanayake, chai