TRANSPACIFIC LINES TO DISCUSS RATE INCREASES, CAPACITY CUTS

TRANSPACIFIC LINES TO DISCUSS RATE INCREASES, CAPACITY CUTS    Senior executives of the Transpacific Stabilization Agreement, a group of 14 of the largest Pacific shipping lines, will discuss the possibility of increasing freight rates and cutting capacity at a meeting in Singapore on Saturday.
   One of the items on the meeting's agenda is deciding on a business plan for the next yearly shipping season starting May 1, 2002, said Zenzaburo Wakayabashi, executive vice president of “K” Line.
   He stressed that TSA carriers, including “K” Line, would consider reducing transpacific capacity voluntarily, but not as a group. Those cuts would be made by individual shipping lines or alliances, he said.
   There are legal problems related to joint capacity management programs, Wakayabashi said, citing concerns expressed by the U.S. Federal Maritime Commission and the European Commission.
   In early October, the TSA confirmed it had dropped a tentative plan to introduce a collective seasonal ship capacity withdrawal program in the overtonnaged Asia/North America trade.
   Control of ship capacity is seen as a sensitive issue in the maritime industry by carriers, shippers and regulators. The TSA had a long running program of capacity management in the transpacific trade from 1989 to 1995 that allowed shipping lines to limit their utilized capacity both collectively and individually. The capacity limit scheme was canceled in 1995.
   The carriers of the TSA are APL, China Ocean Shipping Co., CMA CGM, Evergreen, Hanjin Shipping, Hapag-Lloyd, Hyundai, “K” Line, Maersk Sealand, MOL, NYK, OOCL, P&O Nedlloyd and Yang Ming Marine.
   One sign of the uncertainty faced by carriers is that executives of TSA carriers have met about every two weeks in recent months, compared to only twice yearly before.
   Toshio Shimizu, general manager, containerships business group at “K” Line, said that his company found it encouraging that consumers increased their spending during the first day of holiday season sales in the United States.
   However, “K” Line reported that there has been no growth in the east/west container trades to date since the beginning of the year, whereas growth rates of about 6 percent had been widely predicted.
   In the Asia/Europe trade, “K” Line is also considering capping the used capacity of its ships voluntarily, but it has no plan to withdraw an entire weekly service.