Although not quite at the level of 2009, the trans-Pacific liner shipping industry will experience another very difficult and challenging year in 2012, with many shipping lines again incurring dramatic losses, mainly due to the slower than expected global growth, causing lower than forecasted capacity utilization.
Once again in 2011 we saw dramatic reductions in ocean freight revenue. Having just recovered somewhat during 2010, many carriers again are operating at significant losses and many carriers have already reduced capacity or even withdrawn from some trades. During 2012 we must ensure those losses are reversed, and it is incumbent on all carrier executives in the trans-Pacific trade to voluntarily ensure that predatory rate actions are stopped, and that rates are adjusted to compensatory levels.
Revenues need to return to stable and sustainable round-trip levels. Shippers need to recognize the value of permitting carriers to be profitable – it is essential to not only maintain, but also improve our service levels. Let us jointly bring back the service quality factor as a competitive element for the selection of ocean carriers.
The lower than forecasted cargo volumes have created a capacity surplus. Capacity deployment needs to be flexible and aligned with the latest projections for world trade growth. With the additional new-building sot capacity scheduled to come on stream, it is very likely a capacity surplus will accompany us for the next year or two. However, there exists a huge difference between the gross – and the actual net capacities entering the trades.
It is our responsibility as shipping executives to ensure that capacity supply in the trans-Pacific is aligned to demand so that unnecessary rate deterioration will be avoided. Conversely, we must provide capacity and service levels for which we need to be adequately compensated. If this is not the case, carriers will have to consider voluntary capacity withdrawals.