FEFC ABANDONS CAPACITY WITHDRAWAL PROGRAM
The Far Eastern Freight Conference has abandoned its joint vessel withdrawal program, started on Oct. 1, saying that it is no longer adequate.
The plan aimed to reduce vessel capacity in the overtonnaged Asia/Europe trade by 10 percent, initially for the duration of the off-peak season. The program was to last until next March.
However, at a meeting in Hong Kong on Oct. 24, conference carrier executives “came to the conclusion that the program notified to the (European) Commission was now inadequate and it would be necessary for there to be a more substantial withdrawal of capacity,” the FEFC said.
'The Asia/Europe conference carriers also decided that the notification of the vessel withdrawal program with the EC would be withdrawn, and the conferences lines would now make “their own individual capacity withdrawals and service adjustments” without coordinated action through the conference.
Shipping lines in the high-volume Asia/Europe trade have faced increasing overtonnage. Vessel supply increased 15 percent from July 2000 to July 2001, while demand has remained static, according to ComPairData, the global liner shipping database on the Internet.
Earlier this year, ocean carriers in the transpacific trade also shelved a plan to jointly manage capacity, following unsuccessful exploratory discussions.
However, a large number of large new containerships are scheduled to be delivered in fourth quarter of this year and during next year in both the Asia/Europe and the transpacific trades, raising prospects of worsening overcapacity.
The FEFC conference also said that, in view of the “very low level of rates now being obtained in the Asia/Europe/Asia trade,” its carrier members are preparing a business plan for 2002 that will be announced next week.