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Resistance against Maersk rates

Resistance against Maersk rates
Sri Lankan shippers say they will resist efforts by international shipping lines to raise freight rates this month.

Sri Lankan shippers say they will resist efforts by international shipping lines to raise freight rates this month.

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 announced rate hikes, it remains to be seen whether they can be enforced when there is over supply of vessels," he said.

Perera said he was advising members of the SLSC to shift their business to smaller lines which offer lower rates to avoid having to pay higher rates imposed by bigger lines.

The big lines which have announced "GRIs" or generate rate increases are bound to bring them down if they don"t get the cargo, Perera said.

"But we'll definitely have to pay more if there's an increase in cargo volumes and ships get full," Perera said.

There were signs that the global economic slowdown was ending and trade volumes recovering with Japan emerging from recession and Chinese exports on the rise.

Sri Lankan shippers have long enjoyed low rates on ships calling Colombo for transhipment cargo to and from the Indian subcontinent.

But they have also seen their cargo remaining ashore or been forced to pay higher rates at times when ships on the main trade route between Asia and Europe sail with full loads of Asian exports.


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