Capacity, trade imbalance obstacles to recovery

Capacity, trade imbalance obstacles to recovery

Bingham

   Global shipping supply will continue to outpace demand even as the world enters an economic recovery, particularly in container shipping where many ships remain on order and demand dropped significantly in 2009, said analyst Paul Bingham.
   Bingham, managing director of IHS Global Insight's world trade and transportation market division, was the keynote speaker at a panel discussion Tuesday hosted by the New York Maritime Inc., Baruch College, and the Journal of Commerce. Panelist Howard Finkel, executive vice president of COSCO, acknowledged 'supply and demand wasn’t in our favor, but parked capacity changed the dynamic.' Last year 'rates were as low as $800 when lines needed about $2,000.'

Finkel

   However Finkel characterized this year's transpacific service contract negotiations as 'fairly successful.'
   Rates have rebounded significantly since last year. 'Big shippers didn’t want to pay these increases but we were fairly successful,' Finkel said. 'It's not over though. A lot of small and medium shippers and NVOs (non-vessel-operating common carriers) are still in negotiations. Some contracts will be negotiated until the end of June.'
   Among a range of topics, the Obama administration's focus on trade issues was a focal point of much conversation. 'Exports driving the bus is a big change for us,' said Marianne Rowden, president of the American Association of Exporters and Importers, referring to the administration's well-publicized goal of doubling U.S. exports in the next five years.
   'It’ll be very difficult for the U.S. to double exports in five years,' Bingham said.
   'Washington is putting a lot of pressure on carriers to facilitate exports,' Finkel said. 'But the trade imbalance is a real problem.'
   The slump in U.S. import traffic and large scale mothballing of capacity has left exporters with less equipment, vessels and services to utilize. Finkel also pointed to the disparity in weights between import and export cargos as an issue. 'There is a very serious technical imbalance. Export cargoes can weigh twice as much as imports' he said. That causes a vessel to pass weight capacity faster than it passes TEU capacity.
   Looking forward Rowden is bearish on the United States' ability to dictate world trade policy. 'We’ve lost it in the last two years,' she said. 'We used to have a new trade law every 20 or 30 years. Since 9/11 we’ve had at least five and they are U.S.-centric.'
   'The world has said 'enough,' ' Rowden said. 'There is s huge shift going on and U.S. policymakers are behind the curve.'
   Ted Petrone, president of Navios Corp., was also a panelist for the event, moderated by Joe Bonney, managing editor of the Journal of Commerce. ' Jim Blaeser