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Further capacity withdrawals are being planned on Asia-Europe shipping routes as container lines predict a flat peak season and falling rates.
Forwarders have already been warned of reduced capacity after the hoped-for peak season has failed to kick off.
Few, if any, carriers have imposed a peak season surcharge this year, as many did in the past.
“Rates have been falling during the last eight weeks, due to the extra capacity that has come on the market,” said Purvinder Tesse, a director of forwarder FCL.
“This has been further affected by the lack of a peak season. We have therefore been warned that withdrawals would begin on 12 October.
“The lines hope that if they cut capacity now, rates will remain buoyant until after Chinese New Year [3 February 2011].”
According to another forwarder, the general feeling is that the capacity reintroduced in recent months will be taken back out, despite the introduction by some carriers of new mega-ships.
However, it is expected that fewer vessels will be laid-up, as they were in the early part of this year and late 2009. Instead, carriers will probably idle ships for one or two round-trip voyages, ensuring they are ready to meet any increased demand, should it occur.
In addition to a withdrawal of capacity, lines will rely on slow-steaming – much criticised by some shippers because of its effect on the supply chain. Manufacturers and retailers have to plan longer lead times and tie up capital in cargo not available for sale.
But lines claim they can react to demand much quicker now than they could, say, two years ago.
International Freighting Weekly
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