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2014 Media Kit
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2007 peak season opens for trans-Pacific shipping lines

By: | at 08:00 PM | Liner Shipping  

Vessel space and equipment availability tighten; TSA lines to increase peak season surcharge in August.

With factory holidays in Japan and China behind them, and with summer and back-to-school retail shipments building, container shipping lines are reporting nearly full vessels from Asia to all U.S coasts. Network capacity constraints have already produced equipment shortages and have resulted in some Asia cargo being bumped to later sailings. Near 20% cargo growth in the Asia-Europe trade, and similar strong intra-Asia demand have further tightened space and equipment availability.

Member lines in the Transpacific Stabilization Agreement (TSA) said vessel utilization averaged 86% to the Pacific Northwest, 95% to California ports and 91% through the Panama Canal during May. Forward bookings showed increases to the 90-95% range in the Northwest, and 95% or more for California and East Coast all-water services heading into June, with those levels expected to increase further through the summer. Carrier utilization totals are consistent with recent forecasts by the National Retail Federation/Global Insight Port Tracker Service. Port Tracker predicts record cargo demand in July-August ’ 1.54 million and 1.57 million 20-foot containers (teu) respectively ’ reaching a high for the year during October.

Given the stronger than expected peak season and concerns over growing network constraints and productivity slowdowns through a long July 4 weekend; over inland rail congestion; and over the Panama Canal operating at capacity, TSA lines have adopted a $200 per 40-foot container increase in their peak season surcharges, from August 1 through October 31, 2007.

‘Retail sales are strong and business spending is increasing to replenish inventories,’ said TSA executive Brian M. Conrad. ‘Cargo growth is moderating relative to last year, but it’s on track with earlier forecasts of 10-11 percent in an end-to-end system that’s seriously strained. Anyone waiting for ships lined up at anchor in Southern California as an indicator of congestion misses the point; even small disruptions can produce big problems with marine terminals operating at full capacity, harbor trucking delays, backed up rail ramps, empty containers stranded inland and missed delivery schedules ’ all things that contribute to the higher costs which the peak season surcharge is intended to address.’

Conrad also noted that transpacific ships are carrying more ‘out of scope’ cargo from adjacent trades, such as the Indian Subcontinent or Australia, or Asia-Latin America traffic, making space tighter. Demand in those and other markets are additionally putting pressure on equipment. ‘Carriers are allocating and managing their vessel and equipment assets as efficiently as possible, across multiple trades, to meet increasing customer service requirements,’ he said. ‘This makes planning and resources to cover peak contingencies all the more important.’