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Cost-cutting plan takes its toll as boxship rates hit record low

As freight rates continue to sink, doubts are being raised over the sustainability of container lines using a ‘race to the bottom’ business model

The collapse of container freight rates to a record low has raised fresh questions over the sustainability of the business model that liner operators are adopting in order to make money.

A spate of orders for ultra-large containerships (ULCs) is seen as evidence that lines have succumbed to the idea of using ever bigger vessels to obtain the lowest possible cost per box transported.

In its simplest form, the business model pioneered by Maersk Line assumes that freight rates will continue to fall and that lines need to cut costs at a faster rate in order to be profitable.

Read the full article on Tradewinds

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