Third quarter financial results of the major shipping lines show carriers must remove capacity from the market before they can expect sustained recovery, says Alphaliner Weekly Newsletter.

"All of the carriers which have reported their third quarter results so far are making losses on their container shipping operations. Freight rate increases achieved in the market since July helped little to improve the carriers' bottom lines," said the Paris-based consultancy.

Statements by APL, Cosco, CSCL, "K" Line, MOL and NYK, said Alphaliner, suggest it would take longer to return to profitability than the rosier predictions coming from troubled CMA CGM founder Jacques Saad who said: "We will already see signs of a return to breakeven in the coming months."

To curb financial losses, carriers have cuts cost and removed capacity, idling of surplus tonnage, re-delivering chartered vessels and the disposing of older ships to scrapyards.

The carrier operated idle fleet currently stands at 5.5 per cent of the total world fleet, according to Alphaliner figures. A further 5.3 per cent of the fleet is idle under the control of non-operating owners. So far this year, 310,000 TEU has been removed by scrapping, with 350,000 TEU earmarked to be scrapped by the end of 2009.

"Recent fuel price increases have also led to a resurgence of slow steaming, which not only allows carriers to reduce their fuel costs but also helps absorb surplus vessels," said the report.

"Carriers need to do more to overcome the supply-demand imbalance. Delivery deferrals have only served to delay the eventual injection of surplus capacity at a time when the industry does not require the ships. Further order cancellations would be needed," said the report.