Asian shipowners predict 12-15% transpacific growth

Asian shipowners predict 12-15% transpacific growth       Senior executives of Asian shipowning companies said they expect a 12-15 percent volume growth in the eastbound transpacific liner trade this year linked to the improving global economy, and suggested freight rates are not sufficient to reward previous investments.
   The shipowners, who met as part of the shipping economics review committee of the Asian Shipowners’ Forum in Tokyo April 9, issued bullish growth forecasts as their companies continue negotiations on new transpacific service contracts due to start on May 1.
   The Asian shipowners’ meeting discussed the correlation between cargo movement and gross domestic product. “The meeting noted that the cargo movement in the transpacific trade could be expected to grow by 12 percent to 15 percent annually in 2004 and 2005 according to the correlation between cargo movement and GDP in the last 10 years,” the shipowners said in a statement.
   The forecast is similar to the 2004 growth rate predicted by the independent forecasting organization Global Insight, but it is based on the assumption, now disputed, that container growth and GDP growth are still proportional.
   The Asian Shipowners’ Forum reported recent forecasts by the World Trade Organization that the global GDP growth would reach 3.7 percent this year, up from 2.5 percent in 2003, and that global trade would expand 7.5 percent in value in 2004 up from 4.5 percent in 2003.
   “In view of the forecasts for container capacity and cargo volume, it appeared that the current supply/demand balance in the eastbound trades could be maintained for a few years,” the shipowners said. But the shipowner delegates at the meeting said the market “is still not adequate” for shipping lines to recover past investments — a language that suggests Asian carriers will be looking for further rate increases.
   Commenting on the shipping costs of container carriers and on freight rates, the Asian shipowners noted the upsurge in vessel charter rates, as well as “soaring bunker prices, rising charges of harbors, railways, truckers and feeders and escalating shipbuilding prices.”
   “In addition, inadequate labor productivities and the limited terminal capacities on the U.S. West Coast caused a fundamental problem,” they said in a joint statement.
   The delegates asserted: “it is essential to recover past investment, compensate for present escalating operating costs and execute necessary reinvestment for the future.”
   The forum's meeting was attended by senior executives and shipping association representatives of China, Taiwan, Hong Kong, Japan, South Korea, Singapore, the Philippines, Malaysia and Myanmar.
   The Asian shipowners also reported that the intra-Asia container trade expanded 14.9 percent in 2003 to about 8.3 million TEUs, but freight rates were “not productive” during the year. This market has shown an upturn in 2004, with the prospective improvement of the supply-demand balance, they said.