Lines applaud call for rate restoration

Several major lines have added their support to last week’s lead story in FTW about rate restoration. The words of Captain Salvatore Sarno, chairman of MSC – that rate restoration is the only option for shipping lines and is a matter of survival – were warmly applauded by all the shipping executives interviewed. “And,” said Sue Wood, operations director of Cargocare Freight Services, “it’s a trend that’s becoming increasingly apparent - with rate restoration on both Far East and Europe trades.” So far, she added, MSC’s announcement has been followed by DAL, Hapag Lloyd (confirmed by HL operations manager Tim Phillips) and CSAV, according to recent communications from the lines. FTW had further confirmation from the Taiwan shipping line Evergreen that it had also started a “survival strategy” and had implemented a general rates restoration (GRR) of US$200/TEU from July 1, applicable on both the Far East and South American trades. This is to be followed by a further US$200/TEU GRR on September 2. The reason, the line told FTW, was that carriers are losing big money hand over fist in the current environment. Rates that were in the region of US$1 250/TEU about a year ago have plummeted to about US$275-US$300. The need now, according to the line, is to get the rates back to what it described as “a sustainable level”. Although Maersk and sister line Safmarine were in the “hush period” just before the release of the AP Moller group’s annual results, FTW was led to believe that both lines were of the same sentiments – and that they also have survival progammes and GRRs in place. The Japanese carrier, Mitsui OSK Line (MOL) is also unhappy with the current unsustainable rates. “Basically,” said Cape Townbased market team leader, Andrew Weiss, “if we don’t go the same way we won’t have any rates or services left to offer. “We’ve had to cut back our services because of the money being lost, and increasing the rates has to be part of any plan to survive.” A similar story from Sam Moffitt, SA GM of the German carrier, Hamburg Süd. “I certainly agree with his (Sarno’s) comments,” he said. “We’re at unsustainable levels. “The issue is improving the revenue, and remembering that our costs – like bunkers – are getting ever higher. We have to get rates up to survive.”