"In 2009 all lines made huge losses," he told CASA's 44th annual general meeting.

"Today, the situation is much improved but lines continue to suffer financial setbacks, going by first quarter 2010 losses. The only consoling factor is that losses are lower than in the first quarter of 2009."

Combined losses among shipping lines in 2009 were around 15 billion US dollars.

"Lines are expected to sustain losses this year too," Ranchigoda said.

"To overcome this, shipping lines need to increase freight rates and look to ports to reduce costs for them."

Shipping lines have been progressively raising freight rates in recent months after recession and a huge over-capacity in tonnage led to losses.

Ships ordered then are being delivered now, worsening the over-capacity problem at a time when trade slumped owing to recession.

The lines have also taken ships out of service and resorted to 'slow steaming' in order to reduce over-capacity

But with trade recovering, Ranchigoda said the number of laid-up ships is coming down.

He also dismissed criticism by shippers that shipping lines were resorting to anti-competitive practices and colluding in raising rates and controlling capacity.

"Shippers in the Asian region have raised objections about so-called anti-competitive practices and levying of additional charges by lines," Ranchigoda said.

"There is no anti-competitive practice or any profit-making. Additional charges are purely cost recovery charges which in turn are paid to ports and terminals."

Slow steaming was a policy to save costs on bunkers which rose along with crude oil prices, Ranchigoda said.

Shippers have criticised shipping lines for raising freight rates at a time when the oversupply of vessels should drive rates own and for levying charges in addition to freight rates.