Transport Costs

July 26, 2010 (LBO) - Shipping lines calling at Colombo port may have to raise freight rates to cover losses in recent years and return to profitability, Sri Lankan ship agents representing liners have said. Nimal Ranchigoda, chairman of the Ceylon Association of Ships' Agents, said the shipping industry was in "dire straits" last year owing to global recession which reduced trade.

"In 2009 all lines made huge losses," he told CASA's 44th annual general meeting.

"Today, the situation is much improved but lines continue to suffer financial setbacks, going by first quarter 2010 losses. The only consoling factor is that losses are lower than in the first quarter of 2009.
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Combined losses among shipping lines in 2009 were around 15 billion US dollars.

"Lines are expected to sustain losses this year too," Ranchigoda said.

"To overcome this, shipping lines need to increase freight rates and look to ports to reduce costs for them.
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Shipping lines have been progressively raising freight rates in recent months after recession and a huge over-capacity in tonnage led to losses.

The over-capacity of ships was caused by an ordering binge during the shipping boom years just before the