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Indiaexportnews.com

Boxship price war came at a huge cost

  27.03.2012    

SeaIntel Maritime Analysis has analysed the cost of the price war waged by the container carriers on the two main trades linking Asia with Europe and North America. 
The details underlying the calculation were published recently and it is clear that the fight for market share has not been cheap.
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. To put this number into perspective, SeaIntel Maritime Analysis compared it to pricing estimates provided by NASA and the John F. Kennedy Space Center. 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, it is certainly evident why carriers are now seeking rate increases. The increases on the Asia-Europe trades 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’s perspective, it is equally clear 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, according to Exim News Service. 



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