SINGAPORE's Asian Shipper Council believes container shipping's boom and bust cycle is exacerbated by "cartel" arrangements which encourage over-investment in new vessels, reports the UK's IFW (International Freighting Weekly)..
"In the past five years the lines have made massive profits out of the trade boom," council chairman John Lu told IFW. "These profits were higher than they might have been because they were able to benefit from cartels - the conference system in Europe was only ended last year and is still allowed in Asia."
Mr Lu said the global system of agreements, alliances and conferences which lines use to manage capacity on some trades to set rates were as much to blame for the current freight rate collapse as economic recession.
"They spent this windfall on huge numbers of new vessels, which are still arriving every week," he said.
"In the past five years the lines have made massive profits out of the trade boom," council chairman John Lu told IFW. "These profits were higher than they might have been because they were able to benefit from cartels - the conference system in Europe was only ended last year and is still allowed in Asia."
Mr Lu said the global system of agreements, alliances and conferences which lines use to manage capacity on some trades to set rates were as much to blame for the current freight rate collapse as economic recession.
"They spent this windfall on huge numbers of new vessels, which are still arriving every week," he said.