Friday, October 3, 2008

Conference System Doesn't Work for Carriers

I have always been amazed that even when carriers have anti-trust immunity, they don't really know how to use it.

This report from Lloyds List says the carriers agreed to one thing, and then did something else.

What a surprise.

Only Maersk adhered to the agreement.

My guess is they were the one to propose it in the first place, and everyone else just took advantage of them.

"... a reported decision by lines at a Far Eastern Freight Conference meeting earlier this year to target ship utilisations of around 85% to keep rates stable as new capacity comes on stream.

Lloyd’s List was told by a third party that Maersk Line was one of the very few major carriers to adhere to that agreement, only to find other carriers snatching away its accounts by cutting rates.

Maersk Line, which has adjusted capacity in line with a slowdown in volume growth, then abandoned its policy of restraint to protect its customer base and ensure market share was not eroded, according to market sources.

But the result has been a bloodbath, with spot freight rates plummeting to record lows just as lines begin negotiating 2009 contracts with their big customers. "

Click here
for complete article.

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