Injection of new tonnage could 'poison' shipping lines, claim
Shipping line chief claims lack of liner conferences has upset industry balance
The abolition of liner shipping conferences has brought more volatility as there is less market intelligence available for carriers to make decisions on rates, claimed Nicolas Sartini, Senior VP of CMA CGM.
He was speaking at the Containerisation International 13th Annual Global Liner Shipping conference in London this week.
Injection of new tonnage could 'poison' shipping lines, claim
Shipping line chief claims lack of liner conferences has upset industry balance
The abolition of liner shipping conferences has brought more volatility as there is less market intelligence available for carriers to make decisions on rates, claimed Nicolas Sartini, Senior VP of CMA CGM.
He was speaking at the Containerisation International 13th Annual Global Liner Shipping conference in London this week.
But he added: “One of the few good things about the demise of conferences, is that carriers are forced to go deeper into market intelligence.
“Each line acts completely independently not being aware of the latest market developments. This is quite apparent as we speak.
“The Asia-Europe market, for example, is suffering from uncertainty on the demand side due to budgeting restrictions in European countries and the increase in oil prices is impacting consumption at destination countries,” he said.
“At the same time, new tonnage is injected at regular intervals, like a poison slowly injected into the veins of the operators.
“This can be understood as it is inertia, it is extremely painful for a carrier to abandon a new project which has been carefully planned over several months.
Sartini questioned: “What might happen though, if volumes don’t pick up in the peak season? Overcapacity will drive rates down, while bunker costs are soaring and profitability will plunge.
“The loops operated by the smaller vessels will be closed – in the best case, the vessel will be reallocated somewhere else; in the worst case, they will be idled.
“The smaller or weaker players will either leave the trade or find refuge on board larger tonnage operated by bigger carriers.
“The global players will flex their network and will reallocate on their larger vessels, the volumes operated on smaller services covering adjacent trades."
Sartini said that a combination of all the carriers’ independent actions would eventually result in a return to balance and stability.
“And then a season of rate increases and surcharges will start again, driven by the carriers that need to recover losses.”
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