THE Transpacific Stabilization Agreement (TSA), a discussion group representing 15 container shipping lines in the trans-Pacific trade lanes which reported three per cent year on year first quarter cargo growth from Asia to the US, has forecast an even stronger second quarter and a continuing need to improve revenue and restore service levels as congestion along the west coast eases.
TSA says that stable, compensatory rate levels are key to meeting expected seasonal second quarter demand and has recommended a general rate increase (GRI) of US$600 per FEU on June 1 and July 1, as well as a peak season surcharge (PSS) of $400 per FEU, to take effect on July 1.
The increases, TSA said, are intended to counter recent erosion in market rates, while the PSS will help cover contingencies from seasonal cargo surges.
"The entire transportation and logistics sector is still digging out from a very difficult period, and all parties are eager to return to a more stable, predictable environment in moving goods to market," said TSA executive administrator Brian Conrad.
"We're fortunate that the US consumer remains strong, port throughput is improving, and operational chokepoints have eased. But it must be remembered that baseline service levels come at a cost."
Mr Conrad emphasised that while overcapacity in the market will likely remain a consideration throughout 2016, it will not represent a major challenge.
Responding to analyst forecasts of more than 20 per cent overcapacity on US east coast services and downwards pressure on freight rates, he pointed out that in several aspects the underlying capacity analyses were based on faulty assumptions.
They include using the nominal shipyard-rated capacity of new vessels entering the trade and not the effective capacity after adjusting for vessel loading, berth and terminal capacity and other factors.
In addition, double-counting services launched as much as a year ago as new, including services carrying significant Indian Sub-continent o other out-of-scope cargo; overlooking the longer-term shift in demand to US east coast and Gulf coast services, particularly via Suez; and assuming that most traditional west coast traffic will return to west coast ports once the current congestion situation ends.
"Our carriers see a very different set of facts on the ground," Mr Conrad said, "with perhaps a 15 per cent net capacity increase in a market segment that grew by 10 per cent last year and by an annualized 22 per cent in the first quarter - nearly half of that the result of organic growth, not congestion-related cargo diversion."
TSA members are: APL, "K" Line, CSCL, Maersk Line, CMA CGM, MSC, Cosco, NYK, Evergreen Line, OOCL, Hanjin Shipping, Yangming Marine Transport, Hapag-Lloyd, Zim and HMM.
WORLD SHIPPING
10 May 2015 - 19:43
TSA predicts strong Q2 volumes; recommends June, July GRIs & peak season surcharge
THE Transpacific Stabilization Agreement (TSA), a discussion group representing 15 container shipping lines in the trans-Pacific trade lanes which reported three per cent year on year first quarter cargo growth from Asia to the US, has forecast an even stronger second quarter and a continuing need to improve revenue and restore service levels as congestion along the west coast eases.
WORLD SHIPPING
10 May 2015 - 19:43
TSA predicts strong Q2 volumes; recommends June, July GRIs & peak season surcharge
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