Cartels, box shortages, soaring rates menace recovery: shippers

CONTAINER shortages, soaring rates resulting in rising supply chain costs threaten the global recovery of international trade, declared John Lui, chairman of the Singapore-based Asian Shippers' Council.

"The US recovery is not strong enough to absorb price increases and the value of the euro has fallen. I think the rising cost of moving cargo, which must be passed on to buyers, threatens the trade recovery. We're also seeing some companies moving production closer to [end] markets. That's normal when freight costs are high and so unpredictable," said Mr Lui.

"It's hard to prove, but lay-ups, slow-steaming make it obvious that it is collective action that has enabled the lines to charge higher rates and surcharges. Artificial shortages are helping the lines make good their losses," he said.

"The recovery has been much faster than expected. Business has recovered, but the economy overall is still uncertain. Orders are smaller and more short-term than pre-crisis," he said.

"Freight rates started to rise before any sign of recovery," Mr Lu told London's International Freighting Weekly. "This is not normal. Because of the crisis, the shipping lines have started to work more closely and, in my view, this is the action of a cartel that has pushed shipping rates and surcharges artificially high.

"Shippers are suffering higher and higher shipping costs already, reflecting cartel movement rather than market forces. The shortage of containers is another factor to the advantage of shipping lines, but actual capacity is still in oversupply," said Mr Liu.
(Source:www.schednet.com)