Only stable rates will sustain service, say carriers

Only stable rates will sustain service, say carriers

SHORT HILLS, N.J. -- Carrier service on both legs of the trans-Atlantic is not "sustainable" unless carriers can get stable pricing, said Paul Devine, vice president of trans-Atlantic trade at OOCL (USA) Inc., Monday during a roundtable discussion at the first annual Trans-Atlantic Maritime Conference sponsored by The Journal of Commerce.

"We've already seen some carriers withdrawing ships from the North Atlantic trade because they can get better returns in the Pacific," said Stephen Edwards, senior vice president and general manager of Atlantic trade at Royal P&O Nedlloyd Ltd. He cited Senator Lines, Cosco and Maersk Sealand as carriers that have suspended some services on the Atlantic. "What has changed is the scarcity of assets," he said.

That includes a shortage of containers and the kind of vessels that serve the trans-Atlantic trades, said Jorgen Schmidt, senior director of trans-Atlantic trade at Maersk Sealand. Even with the huge number of new vessels scheduled to arrive in the next three years, he said he doesn't expect much new capacity to be deployed on the Atlantic. "We predict that for two years and maybe even four, smaller vessels won't cascade onto the Atlantic," he said. That's because demand is growing so fast in the Pacific that it's likely to absorb the supply of new ships.

Moreover, the executives said it's unlikely that ship owners will deploy smaller vessels into the trans-Atlantic because they'll likely choose to put them in more lucrative duty in the north-south trades of South America and West Africa.