After capacity cuts, rates rise on Europe/Canada route

After capacity cuts, rates rise on Europe/Canada route Conference shipping lines in the trade between northern Europe and Canada are planning substantial freight rate increases, particularly westbound, only months after reducing ship capacity in the trade.
   In a joint statement, the Canadian North Atlantic Westbound freight Conference and the Continental Canadian Westbound freight Conference said its carriers will raise westbound rates $280 per 20-foot container, $350 per 40-foot dry container and $350 per reefer container, effective July 1. The statement added the carriers will raise westbound rates again in October, but did not specify the amounts. The carrier conferences cited rising costs and revenue losses as the reasons for the rate hikes.
   Eastbound, the Canada United Kingdom Freight Conference said it will increase freight rates on all commodities to the United Kingdom by $100 per container, effective June 1.
   “There has been a substantial withdrawal of tonnage on the transatlantic, particularly for Canada,” said Michael Dietmar, product manager with the German forwarding group Schenker. The capacity reductions of carriers “put them in a position that eases rate increases.”
   In April, vessel-sharing agreement partners CMA CGM, Lloyd Triestino and Zim Integrated Shipping Services said they would end their weekly “Europe Canada Express” service calling at Montreal. CP Ships also cut capacity during the first quarter on one of its North Europe/Montreal loops from 2,400 TEUs to about 1,600 TEUs per week.
   But despite the withdrawal of transatlantic services calling at the port of Montreal, container traffic at the Canadian port increased 12 percent in the first three months of 2005, to 303,498 TEUs.
   Schenker has experienced minor shortages of ship capacity on the northern Europe/Canada route, and believes some shippers may have had to rollover cargo due to serious supply shortages.
   The eastbound and westbound northern Europe/Montreal conferences, whose members are Canada Maritime, Cast, Hapag-Lloyd and OOCL, also said their bunker surcharge would rise to $281 per 20-footer and $562 per 40-foot container, effective June 1, due to “much higher fuel prices.”
      On April 29 the Trans-Atlantic Conference Agreement also said it plans to introduce westbound freight rate increases for shipments between northern Europe and the United States. TACA’s planned rate hikes amount to $240 per 20-foot container and $300 per 40- or 45-foot box and will be effective July 1.