Who creates inflation, shippers or shipping lines?
World wide shipping lines have been blamed for price volatilities in commodities. Very soon, shipping companies may effect a 15-30% hike in container freight rates because of rising crude oil prices, according to Times of India. On the other hand shipping companies allege that it is their customers or shippers who are causing price volatilities. Gianluigi Aponte, Chief Executive of Mediterranean Shipping Company was quoted in Financial Times as saying that shippers had abused current industry over-capacity to stir up price competition that has led to fall in container rates below operating costs.He has blamed the aboliton of conference system in 2008 which enabled shipping lines to discuss future capacity and demnad, to smooth out price swings for the present crisis in the industry. Here again it was the shippers who lobbied with the European commission to abolish the system from October,17, 2008, FT report said.
Back home, with truckers threatening an indefinite strike from April 5, commodity inflation is set to zoom with the situation made worse by 2% increase in excsie duty announced in the 2010-11 India Budget. On an average, container freight rates have been hiked by about $300 for 20ft containers and about $400 for 40ft containers. The raise has been necessitated by the increasing shipping to Europe from across the world and an increase in the bunker fuel factor (BFF), Times of India report added.
Maersk Line has effected a general rate hike since February in the south Asia/West Asia to Europe route. The cost of moving a 20ft container from Asia to Europe had oscillated from $350 in January 2009 to about $1,500 now. Container shipping plays a vital role in facilitating movements of manufactured goods, particularly from Asia, FT report adds. Aponte was quoted as saying that no major container lines would be hurt by the crisis of 2009 and would emerge out stronger in 2010-11.