TRANSPACIFIC cargo demand will continue to improve during 2011 as the US economy recovers, roughly in line with new vessel capacity entering the Asia-US trade lane in the same period, according to a statement from the Transpacific Stablisation Agreement (TSA).
With a traditional third quarter peak season now considered likely, container lines in the TSA say that additional ships now being delivered will ultimately be needed and well-utilised. TSA members include APL, "K" Line, China Shipping, Maersk, CMA-CGM, MSC, Cosco, NYK, Evergreen, OOCL, Hanjin, Yangming, Hapag-Lloyd, Hyundai MM and Zim.
"We expect overall 2011 load factors to remain quite strong," said TSA executive administrator Brian Conrad. "Even if there proves to be dips in utilisation levels during certain periods, the experience of early 2010 is still relatively fresh in carriers' minds. Each carrier faces clearly defined costs in shore side labour, equipment, inland transportation, debt service, documentation and so on. Knowing those costs, managing them effectively and keeping rates at compensatory levels will be critical to any carrier's long-term competitive position in this trade."
"After demand growth of more than 15 per cent in 2010, we expect further growth in the 7-8 per cent range for 2011," said YM Kim, president and CEO of Hanjin Shipping.
"This continued cargo growth, from a much higher base, is in our view a very positive sign of recovery." Mr, Kim noted that cargo activity is somewhat quieter than expected in the run-up to Lunar New Year holiday factory closures in Asia. But he added that "advance bookings and market data suggest a return to robust trade flows by late spring and early summer, with a possibility that vessel space and equipment will be tight at times leading into the peak season."
TSA noted 2011 industry forecasts of 8.8 per cent growth in transpacific capacity and added that delays on new vessel deliveries, heavy demand for ships on intra-Asia routes and other factors will temper the impact of that growth as well. Reinvesting in carrier service networks to meet demand growth and serve customers' specialised needs, TSA said, making its recommended programme of adjustments to rates and charges all the more critical," he said.
TSA's internal reporting indicates that Q4 2010 carrier vessel utilisation was higher than that portrayed in recent analyst or press reports, and were typical for the onset of the traditional post-holiday winter season. Average west coast utilisation among TSA's 15 members ranged from a high of 96 per cent in late October to a low of 79 per cent in early December. East coast utilisation ranged from 94 per cent in early October to 84 per cent at the end of November. Utilisation in early January 2011 was 88 per cent to the west coast and 95 per cent to the east coast.
Mr Kim added that container equipment may also be in short supply this summer, placing constraints on effective capacity across carrier networks. TSA lines estimate that container manufacturing facilities in Asia are operating at half their peak 2008 production levels of 3.5 million units annually, and will reach close to three million units by the end of 2011.