The situation looks bleak for container shipping lines participating in the Westbound Transpacific Stabilisation Agreement (WTSA) as they struggle to overcome continuing space and equipment shortages to Asia.
The problem is that there are "complex operational and cost factors behind those shortages", which have left both carriers and shippers with "difficult challenges", a statement issued on behalf of member lines said.
They noted that a weak dollar and robust Asian demand for agricultural products, industrial raw materials, machinery, and other commodities, have prompted forecasts of 12-13 per cent westbound cargo growth over 2008-09, compared to nearly 17 per cent growth in 2007.
Other factors, they said, have also fuelled the explosion in containerised exports. For example, earlier this year, commodity demand in Asia and rising grain prices pushed up bulk vessel charter rates to historic levels, causing shippers to shift more US grain exports from bulk ships to containers.
While eastbound traffic grew by less than one per cent in 2007, the volume of loaded containers shipped from Asia was still more than twice that of loaded container volume for return US exports.
"That imbalance means transpacific carriers must continue to scale their fleets, routing and schedules for the higher volume Asia-US head haul segment, and the current soft inbound market does not justify adding new capacity, particularly given record fuel and other fixed operating costs," the WTSA release said.
Thus, US exporters and their carriers find themselves squeezed in both directions, a sharp increase in Asian demand for US products, driven by a weak dollar, along with a falloff in eastbound volumes as US economic growth slows, resulting in little to no new capacity entering the trade.
"No one sets out to turn away business, but at this point carriers face hard choices with each sailing about how best to balance competing customer demands for limited vessel space and equipment. To say that carriers are not doing all they can to accommodate the maximum amount of export cargo their networks will handle is simply inaccurate," said WTSA chairman Ronald Widdows, also CEO of Singapore-based container line APL.
He noted that depending on the vessel involved and the cargo mix, a westbound sailing may load 35-50 per cent fewer containers due to added weight, necessitating adjustment in cargo flow and equipment repositioning within the US.
Getting equipment to Midwest grain states, he said, has proved both difficult and costly, as inland rail and truck rates have increased by 25-35 per cent. Shipments of scrap metal and wastepaper, which has represented more than a quarter of the total export container market, have also surged, creating competition for vessel space with the higher demand for agricultural products and manufactured goods.
As vessel space becomes scarce, shippers compound problems with multiple bookings in an effort to assure equipment availability, adding significantly to carriers' challenges in matching vessel space and equipment with available loads. Most carriers' westbound sailings are now fully booked six to eight weeks in advance, he added.
WTSA executive administrator Brian Conrad said that WTSA lines are reporting progress in working with customers to match empty equipment with return loads; cut back on overbooking; have cargo delivered by trailer, boxcars or other means to rail ramps or inland depots where empty container equipment accumulates; and develop transload, street turn and other strategies to optimise roundtrip equipment utilisation.
WTSA members are: APL, HMM, "K" Line, Cosco Container Lines, Evergreen Line, NYK Line, Hanjin Shipping, OOCL, Hapag-Lloyd and Yangming Marine Transport Corp.
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