Container carriers moving cargo into the United States are going to take "a heck of a beating" between now and next spring when shipping contracts renew because of the rising cost of fuel, Ron Widdows, APL's chief executive officer, said Tuesday.
Rising bunker fuel prices -- as much as $514 per ton in Singapore in the past week compared to about $280 a year ago -- is going to have a "profound effect" on the shipping industry, Widdows said at the annual conference of the U.S. Association of Importers of Textiles and Apparel and American Import Shippers Association in New York.
Carriers are pulling capacity from Asia-to-U.S. trades, saying the combination of rates and fuel costs have forced most carrier to lose money on the trade during the past two years. Widdows noted the New World Alliance, to which APL belongs, announced capacity cuts Tuesday. It will reduce capacity in the transpacific by 10 percent immediately, and another 5 percent to 10 percent from early December. Widdows is also chairman of the Transpacific Stabilization Agreement,
Widdows said trade to the United States is becoming less important because of the booming trade within Asia and between Asia and Europe.
He said rising oil prices is allowing countries in the Middle East to fund a "gargantuan amount," $1.5 trillion, of infrastructure development over the next five years, and a growing consumer market in that region is helping absorb a lot of capacity.
West Coast ports are "relatively fluid" this year, but that port congestion is growing in Europe and Asia, he said.
"The Europe terminal environment is an enormous problem," he said, adding Rotterdam has placed restrictions on the movement of empties and transshipment boxes. He also said Hamburg and U.K. ports are suffering from congestion.
In the United States, while Los Angeles and Long Beach have had a respite from congestion, he complained that New York is "not keeping pace with growth" and needs additional infrastructure -- especially to handle increased rail and truck volumes.
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