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Defying
industry expectation, the Far
Eastern Freight Conference has
decided to raise the westbound
freight rate instead of
withdrawing capacity in what is
seen as a hopeless attempt to prop
up the freight rates which has
collapsed to historic low.
The
conference, which met in London
last week, said member lines will
be forced to axe services or
withdraw from the crisis-hit
Europe/Asia trades unless freight
rates increase from their historic
lows.
Far
Eastern Freight Conference said
member lines planned to increase
westbound rates from areas other
than Japan by US$300 per TEU from
January 1.
It
also indicated that eastbound rate
increase of US$250 per box is
scheduled to take effect in March,
while rates from Japan will also
be going up.
Industry
sources were quick to point out
that even if the rates move up
carriers will not be earning
enough to obtain a return on
capital employed.
Recently
market rates have dived to around
US$500 per TEU from Asia to Europe
compared with US$1,100 in January
and last year’s peak of US$1,400
per TEU.
Member
lines of the conference recently
abandoned a voluntary vessel
withdrawal scheme which would have
removed about 10 per cent of
capacity from the trade for a
six-month period after it was
realized that the cut would not
take them anywhere as excess
tonnage is said to around 20 per
cent.
Member
lines and alliances have been
urged to act independently to
contain the excess capacity in the
market which is threatening to
send a number of large shipping
companies, including APL-NOL into
the red.
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