TSA: 2011 Demand, supply to be in line

TSA: 2011 Demand, supply to be in line    Transpacific Stabilization Agreement carriers said Friday they see containerized cargo demand in 2011 being 'roughly in line with new vessel capacity entering the Asia/U.S. trade lane over that period.'
   Downplaying worries by analysts that capacity entering the market this year would put the liner industry under pressure, TSA said it expects the additional ships being delivered would 'ultimately be needed and well-utilized.'
   Specifically TSA said delayed vessel deliveries and heavy demand for ships on intra-Asia routes and other factors will temper the impact of global fleet growth.
   'After demand growth of more than 15 percent in 2010, we expect further growth in the 7 to 8 percent range for 2011,' said. 'This continued cargo growth, from a much higher base, is in our view a very positive sign of recovery.'

Kim

   Y.M. Kim, president and chief executive officer of Hanjin Shipping Co., said cargo activity is somewhat quieter than expected in the run-up to Lunar New Year holiday factory closures in Asia. But he said, '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.
   'All of us had to hit the ground running in early 2010 — climbing out of the deepest global recession in decades, redeploying assets and restoring services. Carriers rushed to fill ships, did not always get their pricing right, and at times alienated valued customers as they struggled to recover. Our focus in 2011 must now be to rebuild relationships, based on reliable services at fair, stable prices. Our aim is to stabilize rates and avoid the dramatic peaks and valleys that have characterized the trade for the last several years.'
   TSA took umbrage with press and analysts reports portraying low vessel utilization in the fourth quarter of 2010.
   'TSA's internal reporting indicates that Q4 2010 carrier vessel utilization was higher than that portrayed in recent analyst or press reports, and were typical for the onset of the traditional post-holiday winter season,' TSA said. 'Average West Coast utilization among TSA's 15 members, for example, ranged from a high of 96 percent in late October to a low of 79 percent in early December. East Coast utilization ranged from 94 percent in early October to 84 percent at the end of November. Utilization in early January 2011 was 88 percent to the West Coast and 95 percent to the East Coast.'
   TSA executive administrator Brian M. Conrad said member lines expect load factors to remain high in 2011.
   'Even if there prove to be dips in utilization levels during certain periods, the experience of early 2010 is still relatively fresh in carriers' minds,' Conrad said. 'Each carrier faces clearly defined costs in shore side labor, 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.'
   He 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 roughly half their peak 2008 production levels of 3.5 million units annually, and will reach close to 3 million units by the end of 2011.
   In justifying the need to raise rates and some surcharges in 2011, TSA said 'reinvesting in carrier service networks to meet demand growth and serve customers' specialized needs makes (the) recommended program of adjustments to rates and charges all the more critical.'
   TSA members lines are APL, China Shipping, CMA CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, Maersk, Line, Mediterranean Shipping Co., NYK Container Line, OOCL, Yang Ming and Zim. ' Eric Johnson