‘It’s a matter of survival’

It’s simply a matter of survival, says Captain Salvatore Sarno, chairman of Mediterranean Shipping Company. Announcing the implementation of a rate restoration of US$ 200 per TEU ($400 per 40ft) on the company’s north/south weekly service between Northwest Europe and South Africa as well as the Far East-South Africa (Cheetah) service, he told FTW that lines were losing money with every voyage they make. “One just needs to do the maths – every voyage equals a loss to the lines of between one and two million dollars, and it cannot be sustained indefinitely. “All shipping remains in a very bad way. In the past 12 months rates have actually gone down although the cost of everything else has increased. There’s been a steady erosion of freight rates so what we are doing now should not be seen as increasing the rates but restoring them, and we have to do it to survive.” He said the lines had examined every possible way of economising, including sailing at slower speeds and consolidating services, but with container volumes dropping by an overall average of 20% there is a point where the only thing left to do is to look at the question of rates. “MSC is sending a signal to the market and to its competitors that it is time to restore shipping rates to at least a level similar to what they were eight to 10 years ago. That’s what this current restoration is doing – it is bringing the cost of shipping a container back to what it was in 2000. That’s the amazing thing. In this period the cost of everything else has gone up, except what it costs to ship a container across the world. “This rate restoration is therefore a ‘must’ for our business and the industry, but we are keeping it at an acceptable level. We are not trying to profit from this but rather to avoid making these excessive losses that we’ve suffered. We are now one year down the road of the worst economic crisis the world has seen for generations and the lines cannot go on forever.” The rate restoration on the South Africa-Europe service takes effect on September 18.