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Carrier-driven-rates cause boycott

Carrier-driven-rates cause boycott
Global shippers are boycotting some container lines because of the risk of failure after a carrier-driven rates war that has pushed some to the brink of bankruptcy.

Global shippers are boycotting some container lines because of the risk of failure after a carrier-driven rates war that has pushed some to the brink of bankruptcy.

Global shippers are boycotting some container lines because of the risk of failure after a carrier-driven rates war that has pushed some to the brink of bankruptcy.

Nestle"s head of global ocean transport Brett Whitfield said today that the food and beverage group was excluding certain carriers from its tender process and diversifying the number of container lines used overall in order to lessen exposure to service closures by financially weakened operators.

But Neptune Orient Lines president and chief executive Ron Widdows does not expect any of the big lines to collapse despite rock bottom freight rates that show little sign of any recovery.

?I would be shocked to see a significant player fail in the short-term,? he told.

Even so, Mr Widdows admitted that container lines were now braced for financial results that will be ?much worse? than most were anticipating a few weeks ago after a dreadful start to the year.

As that becomes more evident, ?so a level of sobriety is developing,? he observed.

Drewry Shipping Consultants recently forecast that combined losses could total $32bn, a figure that Mr Widdows agreed was conceivable.

There is now greater recognition that the current situation cannot continue, with lines - whether listed, privately-owned or under state control - having to face shareholders and explain why they have thrown ?a staggering amount of money into a black hole,? he said.

In the Asia-Europe trades, where a number of lines have brought in rate restoration programmes that took effect today, Mr Widdows said carriers should know within a couple of weeks whether they had made any progress.

At the moment, rates are barely covering variable costs, let alone fixed overheads, he said, while some lines continue to offer all-on rates that combine ocean transport with fuel surcharges.

But he discounted suggestions that any carriers were deliberately trying to drive others out of business through a price war.

?That would be a silly undertaking to consciously go down that road,? he told.

www.TurkishMaritime.com.tr

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