Colombo (The Island/ANN) - Competition among major container shipping lines is expected to reduce freight rates this year (2012) and it would help Sri Lankan shippers to enter major key markets, the Secretary General of the Ceylon Association of Ships Agents Dhammika Walgampaya said.
"It is possible that freight rates would also come down during this year, which would provide a lot of sailing opportunities for Sri Lanka shipping lines," he noted.
The rates on the Asia-Europe trades that have badly hit shipping lines could worsen in 2012 with a flood of new tonnage expected, according to a new report by industry analysts.
New capacity sharing deals struck between major lines and shipping cartels might not enable them to restore rates but will intensify competition between the big players, industry sources said.
"These developments in relenting rate war on the Asia-Europe trade is set to continue and may cause disaster for carriers in 2012 with the reduced freight charges," industry specialists said.
The rate war among carriers has seen westbound freight rates going down to around US$ 500 a TEU (twenty-foot equivalent container unit) from over US $ 1,400 dollars at the beginning of the year, due to the financial crisis and it is likely to continue this year as European economies are still grappling with the financial crisis.
Trade officials said the rate war could help Sri Lankan exporters enabling them to benefit from low freight charges at a time when demand in Europe and North America is expected to decline due to economic turmoil there.
With these developments, Sri Lanka's export earnings would likely come down during the year due to the European and US financial crisis, which is yet to recover given the current situation.
According to industry sources big shipping lines with vessel sharing and slot exchange deals have yield economies of scale during a downturn in trade will not lead to any capacity reductionIt forecasts that competition in the Asia-Europe trades will become fiercer in 2012 with several big container ships ordered earlier being delivered to shipping lines.
It noted that shipping lines were forced to abandon efforts to raise freight rates this year or impose 'peal season' surcharges when an anticipated surge in year-end cargo shipments did not materialize.
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