“WE HAVE learned our lesson.” How many times has that promise been heard in the aftermath of some shipping crisis? And how quickly have such reassurances been forgotten?
In the container trades, lines have always responded to some wild swings in freight rates by insisting it would never happen again, and that trade stability was their ultimate goal. But in a highly charged marketplace and with ships to fill, it never takes long for one carrier to break ranks and start cutting rates in a bid to expand trade share. Very soon, they are all at it, and a full-scale price war is raging.
Why not? That is what markets are all about. Shipping lines are no different from any other corporate entity. They are in business to survive, not to protect the competition through gentlemanly behaviour.
But the crash of 2009 was like no other, forcing lines to take actions that not only helped some weaker carriers stay afloat, but also will become valuable management tools.
Owners and operators took the unprecedented step of laying up tonnage, including brand new vessels collectively worth billions of dollars. These ships are now returning to service, but will quickly be withdrawn if market conditions falter again. Even easier is to adjust ship speeds. Slow steaming was something lines were slow to adopt, but they now understand just how effective this is in both rapidly cutting costs and absorbing capacity.
So, just possibly, lessons really have been learned this time round.
Source: LLOYD’S LIST