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Shipping firms cut costs
2009/2/17
As the global economic slump continues to weigh on trade, shipping lines have begun cutting costs by using their own cargo vessels, thus, saving on freight charges on common feeder ships, even if this tack adds travel time, BusinessWorld reported.
"Shipping lines and port operators now reduce operational costs which results in a reduction of scale, leading to a reconfiguration of the network navigation," said Rafael Sapina, director of liner shipping and port operations in the port of Valencia in Spain.
Jesus Sedano, Philippines country manager of Regional Container Lines, said that some shipping lines are now engaging in "substitute service" by using their own dedicated vessels, instead of faster common feeders.
Cargo from the Philippines bound for Europe usually go through Singapore, where it is serviced by common feeders.
But because of falling demand that results in unfilled cargo vessels, some shipping lines now opt to go through the longer route of Taiwan, where many local shipping lines have their own dedicated feeders to service their cargo. Most of the goods going to US, the Philippines'' prime export destination, normally pass through Taiwan.
About three to four more days are added because of the route change, in exchange for not paying freight charges to common feeder vessels. "It''s a trade-off between cost and efficiency. Right now, it''s ok for shipping lines to lengthen travel just so they could reduce costs," Sedano said. "If this trend continues, we will be forced to also lower our freight rates because we have to survive."
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2009/2/17