Tokyo: Japan's MOL has announced a rate restoration programme on the troubled Asia-Europe liner route which, the carrier says, will come into effect from April 1. Describing the current downward trend as "completely unsustainable", MOL is confident that "customers will recognise the need to maintain stability and viability in their supply chain operations over the long term."
However, analysts are not so sure that the rate increases - $200 per TEU eastbound on April 1 and September 1, and $300 per TEU westbound on April 1, June 1 and August 1 - will be accepted by shippers who are themselves under price pressure in consuming markets.
Carriers on the world's most important liner route have already slashed capacity by nearly a quarter since September, as the downturn has deepened, and market reports indicate that there are more than 300 idle container ships as a result of cuts in services. The crisis can only worsen in the months ahead, however. According to Clarkson statistics, there are more than 1150 container ships on order including 250 Panamax vessels, 185 post-Panamax units in the 3-8,000 TEU range, and a frightening 270 ships with capacity more than 8,000 TEUs.
In a recent market report, Clarkson noted that the recent boom led owners to believe that the container market was fundamentally sound and "emboldened liner operators and charter owners to go on the biggest newbuilding investment spree in container shipping history." However, recently idled vessels are unlikely to improve the market, Clarkson says, as these ships still figure in the overall supply equation.
Some believe that surviving the months ahead may prove to be the biggest challenge yet for a whole range of container lines. Even cheaper bunkers are not much help - some carriers cut ship speeds and introduced extra tonnage to maintain service frequency. But now, slow steaming saves much less and running extra ships at below breakeven makes no economic sense. This is no longer a sensible way of absorbing extra ships, sources say.
Brokers report a range of confidential negotiations between liner operators and shipyards aimed at postponing or cancelling contracts. But the drive for economies of scale - which made good sense when ships were running full and was the catalyst for the frantic ordering of ultra-large vessels ?" is now a huge burden on carriers who can't even book enough cargo to fill the ships they operate today... at least the ones that are still in service. [09/02/09]
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