17 November 2009

All Trans-Pacific Rates to Rise in 2010

This article is excerpted from the 17 November 2009 edition of “The Journal of Commerce”.

Freight rates in the trans-Pacific will go up in 2010 even though supply-demand economics will most likely not be favorable for ocean carriers, a senior carrier executive said Monday.

"We will increase rates because we have to," said Ronald D. Widdows, chief executive and group president of the NOL Group, parent company of APL Ltd. Rates have to increase a lot, and soon, or some carriers will go out of business, he said.

Carriers this year will lose an estimated $20 billion in their global operations, Widdows said in an address to the annual transportation conference sponsored by the Intermodal Association of North America, the National Industrial Transportation League and the Transportation Intermediaries Association.

All indications are that excess capacity will plague the largest U.S. trade lane next year, and possibly for the next three or four years, because of all the vessels that are on order. The earliest the trade can anticipate a capacity squeeze is in 2013, Widdows said.

Carriers are attempting to manage capacity by reducing vessel strings, eliminating port calls and combining services….

The carrier cutbacks are playing havoc with the supply chains of retailers. …