Winter capacity cuts on the way, say MOL, “K” Line

Winter capacity cuts on the way, say MOL, “K” Line

Winter capacity cuts on the way, say MOL, “K” Line

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Shippers will see reduced container services again this winter as carriers look to balance the supply/demand equation in the slack season to help push rates up, according to Japanese carriers MOL and “K” Line.
   The same thing happened last year as carriers attempted to redress sliding freight rates through capacity withdrawal measures such as slowing ships, skipping voyages and culling services altogether (see 'Cutting east/west capacity,' February American Shipper, pages 48-53).
   Just recently the Grand Alliance has merged two of its transpacific loops until late February and similar short-term actions are expected across the networks of other carriers and consortia.
   “With respect to the second half of fiscal 2007, though the containership business goes into a slack season in winter in trunk line east/west services, cargo volumes in the North American routes are expected to grow steadily, and those in the European and Mediterranean are forecasted to continue to grow constantly,” said “K” Line in its first half fiscal year 2007 financial report, released today. “In the supply side, each shipping company is expected to decrease its services as a countermeasure for the winter season, and particularly the problem of infrastructures at the North European ports is prevailing. As a result, supply and demand relationship is expected to remain tight.”
   MOLs first half report, also out today, included the following: “We expect cargo volume on all routes will remain high even in the usually slack winter season. We continue to focus our efforts on recovery of freight rates on routes serving Europe, South America and Africa. Though we expect strong trade growth on the North American route, we are looking at ways to temporarily adjust fleet supply and demand balance by reducing sailing frequencies in case the demand weakens vis-'-vis supply, due to seasonal fluctuations.”