Shipping Lines to Blame for Financial Crisis says Shippers' Voice

Shipping lines have only themselves to blame, says Shippers’ Voice.

Few shippers will have much sympathy for shipping lines’ current financial situation since they invariably see this as “a result of the lines’ mismanagement and arrogance towards their customers over many years - these are not my words, but theirs,” says Andrew Traill of www.shippersvoice.com

He was reacting to the announcement by the 14-member Transpacific Stabilisation Agreement (TSA) that the members plan to renegotiate contracts with customers to raise rates in order to avoid what they say are substantial losses on the Asia-North America route.

Dr. Traill says he was not surprised by the move from TSA. “TSA has been warning its members since April about setting rates too low. The only surprise is that lines have been so short-sighted and persisted in their quest to hold market share rather than focus on profitability.”

He continues: “I would be amazed if many shippers agreed to renegotiate contracts, especially the key account customers. But some may buckle if they think that their freight may not be given a guarantee of loading in favour of higher paying cargo."

Although capacity exceeds demand at the moment, this could change if services are cut in order to fill the remaining ships. “I believe we may see this happen as lines become more desperate to reduce their costs to prevent bankruptcy,” he added.

Dr. Traill says the current situation is not good for shippers or for shipping lines. “The trouble is that this may just come back and bite the shippers hard when they find the number and range of services reduced, with less choice, falling service performance levels and higher rates. This is not a good situation to find ourselves having to deal with. This needs a complete change of attitude and approach to the liner shipping business and customer-provider relations.”