Rate War

Dec 30, 2011 (LBO) - Stiff competition among major container shipping lines that has cut freight rates is likely to continue next year, helping Sri Lankan shippers facing a slowdown in demand in key markets, trade officials said. Alphaliner said recent realignments among big shipping lines with vessel sharing and slot exchange deals meant to yield economies of scale during a downturn in trade will not lead to any capacity reduction.

It forecasts that competition in the Asia-Europe trades will become more fierce in 2012 with several big container ships ordered earlier being delivered to shipping lines.

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It noted that shipping lines were forced to abandon efforts to raise freight rates this year or impose 'peal season' surcharges when an anticipated surge in year-end cargo shipments did not materialise. The rate war on the Asia-Europe trades that has badly hit shipping lines this year could worsen in 2012 with a flood of new tonnage expected, according to a new report by industry analyst Alphaliner.

New capacity sharing deals struck between major lines and shipping cartels might not enable them to restore rates but actually intensify competition between the big players, it said.

These developments forbode that