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Aponte thinks it was a great mistake for the European Union to ban the “conference system,” under which the ocean carriers were able to discuss future capacity and demand to smooth out price swings. What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

Chintzy shippers are to blame for the deteriorating financials of the world’s ocean shipping companies, the CEO of Mediterranean Shipping Company said this week.

 “Shippers are not that deep,” said Gianluigi Aponte, chief executive of MSC. “They worry always who will ship for $50 less. The shippers are concerned solely by the price.” Headquartered in Switzerland, privately held MSC is thought to be the world’s second largest ocean carrier.

The market has been brutal for ocean carriers for more than a year, with some 30 straight months of year over year decreases in container volumes that finally ended in December of last year, and pricing that was reported to be in many cases to be lower even than the variable costs it took to operate the ships.

Carriers have made numerous moves to drastically lower their cost structures, from cutting back on basic supplies used on the ships to reducing speeds by some 33% on many ocean routes to save on bunker fuel costs. (See Import Transit Times Taking Longer? Ships Take Foot off Pedal, Use the Slow Path, to Reduce Costs.)

Maersk said last week, for example, that is had reduced the cost structure of its ocean shipping business unit by some $2 billion over the past year – but the unit still lost some $2.9 billion in 2008, as its parent company suffered a full year loss for the first time since 1904.

Part of the carrier’s challenge is that in the midst of the global shipping near depression many huge ships capable of carrying 10,000 containers or more that were ordered several years ago in the boom times have been and still are being delivered. This has added to ocean shipping capacity even as volumes were falling rapidly, further pushing down prices even as the industry tried to cope by mothballing some 12-15% of its existing capacity in the face of the slow down.

Pricing has recovered quite a bit of late, however. Several carriers were largely successful in pushing through a series of price increases in the summer and fall of 2009 on routes from Asia to Europe and the US.

MSC’s Aponte, for example, says rates to move a 20-foot container from Asia to European ports sank to as low as $350 or so in early 2009, but have since recovered to as much as $1500 per container currently.

With long standing rumors that one of the major ocean carriers was going to need to file for bankruptcy or fail outright, Aponte says he does not believe now that this is going to happen.

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