Sri Lankan shippers said they anticipate further hikes in freight rates as cargo flows improve after the recession with loss-making shipping lines trying to regain profitability and fewer ships calling Colombo.

In the short-term, the latest spike in rates and pressure on ship
capacity might ease after next week’s Chinese new year ahead of which a
surge in cargo volumes pushed rates up.

But shippers said that in the longer-term they expect the rate hikes
that began towards the end of 2009 to continue as trade volumes recover
with the end of recession and shipping lines struggle to stem losses.

Randolph Perera, former chairman of Sri Lanka Shippers’ Council, said
rates had risen by about 100-200 dollars for a 20-foot container in the
Far East sector and even more to Europe since the start of this year.

“It’s mainly because of the increase in volumes before the Chinese new
year,” he said. “A lot of cargo is moving to Europe. It might ease
after the new year.

“In coming months, however, if we’re coming out of recession and Far
East cargo volumes are increasing, shippers might have to pay higher
freight rates,” Perera told LBO.

The reduced number of ships calling Colombo port was a major factor in outing upward pressure in freight rates.

“Also, we’re having fewer lines on the European sector after some lines
pulled out of Colombo,” Perera said. “There are fewer lines calling
Colombo. So we have limited capacity for cargo.”

Last year, global carrier Hanjin as well as a few other lines stopped
calling Colombo as it was no longer profitable for them to do so with
the slump in freight rates.

Freight rates hit rock-bottom in the middle of last year owing to
global recession and a huge over-supply of ships on the main trade
routes after a surge in ship building, resulting in heavy losses to
shipping lines.

But rates began to recover towards the end of last year after carriers
reduced the number of ships on their services, putting them in lay-up,
and also resorted to ‘slow steaming’ – reducing speed – to cut fuel
costs.

Cargo flows have also rebounded making it more likely shipping lines will raise rates again.

“Now that there’s more cargo, lines are trying to recover some revenue right now,” Perera said.

“In the past year we got the best-ever rates in the market. But now
lines are trying to recover as you can’t expect them to go on at a
loss.”

Perera said shippers were also worried about the loss of lines calling
Colombo, making port modernisation efforts, that had been subject to
delays, critical to improving efficiency.

“We’re worried we’re losing lines calling Colombo. That’s why port
development is essential and the authorities must get more lines to
call at the port.”

A project to build a new deep-water port next to Colombo’s existing harbour is underway but has been subject to many delays.

Source: LBO

Search to find what you want

• Sri Lanka ports win as Maersk moves from Chennai

    Sri Lanka’s Colombo port stands to gain more container transhipment business with Maersk, the world biggest container shipping line by volume, deciding to stop direct calls at Chennai, officials said. Maersk Line has announced it will stop direct calls at Chennai on its ‘MECL2′ service linking south Asia to North

• Sri Lanka Dockers End action

    Labour unions at Colombo port, Sri Lanka’s main harbour, Monday ended a ‘go-slow’ action that had caused delays to shipping lines, after striking a deal on a pay hike with the authorities. Sri Lanka Ports Authority (SLPA) chairman Priyath Bandu Wickrama said the labour unions involved in the action ended

• Sri Lanka new port cargo insured seen despite Indian threats

    A new port next to Colombo the Asian Development Bank is helping Sri Lanka to build should get enough cargo despite the expansion of India’s own ports, a senior bank official said. Richard Vokes, ADB country director in Sri Lanka, said Colombo would have to keep up and improve its

• Colombo Port with record levels of throughput

     Colombo Port last year recorded its highest ever annual cargo throughput. The total cargo tonnage handled at the Colombo Port during 2008 was 30,923,831 tonnes, including containerised cargo, an increase of 6.7 percent compared to 28,984,807 tonnes of total cargo tonnage handled in 2007, the Sri Lankan Daily News reported. The

• Colombo Port posts record throughput

     Colombo Port last year recorded its highest ever annual cargo throughput. The total cargo tonnage handled at the Colombo Port during 2008 was 30,923,831 tonnes, including containerised cargo, an increase of 6.7 percent compared to 28,984,807 tonnes of total cargo tonnage handled in 2007, the Sri Lankan Daily News reported. The

• Sri Lanka shippers with higher transport costs

    Sri Lankan shippers are confronted with an increase in transportation costs to and from their markets with loss-making global carriers raising freight rates or announcing rate hikes from next year to restore profitability. Some lines have also withdrawn vessels and services to and from the region and introduced ’slow steaming’

• Colombo Port with record levels of throughput for the last year

    The total cargo tonnage handled at the Colombo Port during 2008 was 30,923,831 tonnes, including containerised cargo, an increase of 6.7 percent compared to 28,984,807 tonnes of total cargo tonnage handled in 2007, the Sri Lankan Daily News reported. The Sri Lanka Ports Authority (SLPA) handled the highest ever container volume in

• WTSA lines stretch rate restoration

     Container shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) are proposing a new series of general rate increases (GRIs) on December 1, 2009 and January 15, 2010, that will affect all dry and refrigerated cargoes to all Asia destinations.

• Vallarpadam win competitive prices for shippers on the cards

    As the work on the ambitious Vallarpadam Container Transhipment Terminal is nearing completion, the Shipping Ministry is gearing to make the terminal attractive by chalking out plans for competitive rates for the shippers. The Ministry has plans to prepare a package for port related charges exclusively for the Vallarpadam Terminal

• The Colombo Port is stable and it is the best port…

    The Colombo Port is stable and it is the best port in the region. We need to attract possible business despite the downward trend in the global shipping industry. Many shipping lines are comfortable with the services we offer and we need to have a strategy to consolidate our position,

• Asian shippers want action on freight rate hikes

    The Asian Shippers Council has a called on the Chinese government to act against sharp increases in container freight rates in recent weeks, despite the glut of overcapacity in the market. John Lu, chairman of the ASC, said shipping lines were acting as a cartel imposing large hikes in freight

• Container lines raise U.S. prices 1 Asia April

    Container shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) are recommending a further general rate increase (GRI) on ocean cargo moving from the U.S. to Asia.

• Sri Lanka shipyard is considering expansion options

    The building of new ports in Sri Lanka has given several expansion options for Colombo Dockyard, a listed ship builder which faces space constraints at Colombo port, an official said. Colombo Dockyard managing director Mangala Yapa said the firm is looking for expansion opportunities as it seeks to increase business

• Asian Shippers Council shifts permanent Secretariat in Sri Lanka

    This week the Asian Shippers Council (ASC), the largest maritime representative body in the world, announced that it will shift its permanent Secretariat to Sri Lanka from Singapore. The shippers are the first to take advantage of Sri Lanka’s new permanent state of peace after nearly 30 years of war and

• Sri Lanka Port expands marine fuel facilities

    The Sri Lanka Ports Authority (SLPA) said it has expanded facilities for bunkering or ship fuel at Colombo port with the addition of another berth for oil tankers that will reduce delays.