Are carriers in the wrong business?

*Analyst says container lines’ losses could have covered cost of 18 space missions

March 18, 2012, 7:40 pm 

Latest analysis from SeaIntel pokes an irreverent finger at the cost of the price war waged by the container carriers on the two main trades linking Asia with Europe and North America.

If the recent rate increases are seen as a sign that the fight is now over, the total cost turns out to be $11.4 billion.

The details underlying the calculation are published in the weekly newsletter SeaIntel Sunday Spotlight, and it is clear that the fight for market share has not been cheap. 

SeaIntel analysts compared the numbers to pricing estimates provided by NASA and the John F. Kennedy Space Center and found that with the money spent on the price war, the carriers could have purchased two space shuttles and used them to fly 18 space missions. 

Given this cost, say the analysts, it is certainly evident why carriers are now seeking rate increases. 

The rate increases on Asia-Europe in March and April will bring rates back to the level before the price war started, however the total increases announced by the TSA on the Transpacific trade would raise rates beyond the downturn caused by the price war. 

From a shipper perspective it is equally clear, say the analysts, that they have received a financial benefit equivalent to two space shuttles and 18 space missions – and that receiving such financial benefits cannot continue indefinitely. 

(IFW)