Transpacific lines see upswing

Transpacific lines see upswing    Ocean carriers are encouraged by stronger than normal growth in container trade during December and January, according to Brian Conrad, executive administrator of the Transpacific Stabilization Agreement.
   The upcoming Lunar New Year is also likely to result in less of a dip in Chinese exports than normal, he said.
   The TSA is a discussion group of 15 major container lines engaged in trade from Asia to North America that pools expertise and sets voluntary pricing guidelines.
   Container volumes typically fall off in late November as the peak shipping season comes to an end, tick up at the end of December and then go down until the Chinese New Year, sometime in February.
   There has been no seasonal fall off this winter, Conrad told AmericanShipper.com in a phone interview from Oakland last week. Volumes remained steady at the beginning of December and have been steadily rising since the middle of that month 'to the point where the carriers are seeing quite a bit of growth over the same time last year,' he said.
   Although comparisons to the fourth quarter of 2008 and first quarter of 2009 are skewed by the global financial crisis that caused trade to fall off a cliff, carriers 'are surprised by the quantum of growth' year over year, Conrad said.
   For the week ending Jan. 17, TSA carriers lifted 88,350 40-foot equivalent units compared to a little less than 83,900 FEUs during the corresponding week a year ago, he said.
   Preliminary indications are that volume increased 10 percent this week versus the same year ago period.
   Conrad attributed the rebound in trade to improvement in the U.S. economy and the fact that retailers, who were cautious about building up inventories heading into the holiday season, need to rapidly replenish after relatively strong sales.
   Capacity utilization of vessels is in the mid-to-high 90 percent range during a time when the measure of available slots to loaded containers historically trends in the mid-80 percent range, he added.
   Some members report that the surge in eastbound volumes has put pressure on equipment availability in Asia, adding to costs for repositioning empty containers.
   Another positive sign for the liner industry is that many factories in China intend to quickly reopen following the Chinese New Year layoff. The Chinese New Year begins on Feb. 14.
   During a typical season factories will shut down for 10 days to two weeks so workers can celebrate the holiday and visit their families. Last year, some plants closed for three to four weeks because of the global recession and the lack of orders.
   Conrad said member carriers are hearing about factories that may only close for one week this year.
   'Factories are asking workers to come back early because they have so many orders that they want to restart production quickly after the holiday,' he said.
   Container lines anticipate a noticeable drop in volumes and load factors in the second half of February due to the New Year phenomenon, and a relatively quick volume recovery by the beginning of March as bookings and loads start tracking upwards again, Conrad said.
   Last month the 15 carriers instituted an emergency revenue charge of $320 to $505 to recover some ground lost during the past year as many commodity rates fell $1,000 or more per FEU. Asian shippers criticized the move as an affront to existing contracts. The TSA said in mid-January it expected a 'significant year-on-year increase in 2010 traffic.' ' Eric Kulisch