By Gene Linn, AJOTChina, the 800-pound gorilla of world trade, is making an impact even on faraway trans-Atlantic container rates. The effect comes as fast-growing demand from China’s burgeoning trade is indirectly helping prop up a substantial rise in trans-Atlantic container rates. The rise cannot come too soon for carriers who endured weak rates for several years. Now, attractive growth in trade to and from China and other Asian markets is siphoning capacity from trans-Atlantic routes. At the same time, healthy growth in US-Europe trade is improving demand. “The supply and demand balance has as a result reached a better balance, which allows for the rates (to be set) at realistically profitable levels,” Maersk Sealand executive Jorgen T. Schmidt told the AJOT. Schmidt is the line’s Trans-Atlantic Regional Line Management. “Rates will have to continue to increase until such time as the carriers become truly profitable. For years the carriers have sustained losses in this trade.” Steamship lines and Non-vessel Operating Common Carriers are reluctant to be specific about rate increases, especially with negotiations with shippers currently underway. It is clear the rises are widespread - and welcome. “We’re seeing an increase in US export volume in 2005 that’s creating space shortages eastbound,” said APL spokesman Mike Zampa. “Meanwhile, Westbound, ships remain tight and there’s not much excess capacity on the market. So, with capacity tight for the rest of 2005 and into 2006, we’ll continue to look at rate restoration programs to offset cost increases.” The spokesman for the North Atlantic Alliance Association Inc., an NVOCC group, noted that capacity had dropped and US exports had increased. “Some level of increase is justified,” said Joseph T. Saggese, the Association’s executive managing director. “But it’s not a drastic increase. It’s not disruptive.” NVOCCs account for about one-third of the trans-Atlantic market, he said. The falling US dollar plays a “big role” in making American exports more attractive, Saggese said. “What was a 20-foot container of exports is now a 40-foot. What was two 20s is now two 40s. It hasn’t been real big growth, but it’s been solid in the first quarter and into the second quarter.” Drewry Shipping Consultants said Europe’s “core” Benelux, Germany, UK trading sector has had only “lackluster” growth. But Drewry analyst John Fossey told the AJOT that trans-Atlantic trade has expanded significantly since mid-2004, largely due to strong growth in trade with Eastern Europe, the Baltic States and Russia. “This was the result of increasing imports, partly the result of the lower value dollar, and competitively priced exports, especially of raw materials, (that is) timber, forest projects, steel and paper.” The surge in this type of export was reflected in US Atlantic coast port throughput. “With our Northern European market, we’ve had very strong export numbers,” said Robert Morris, director of external affairs for the Georgia Port Authority. Leaps of 43% in exports of wood pulp and 44% in clay helped the Port of Savannah raise trade with Northern Europe 23% in 2004. Growth is expected to be more moderate, but still respectable, in 2005 at 5.7% and in 2006 at 4.3%, Morris said. However, Fossey said low-value exports such as clay and timber could be vulnerable because they are particularly sensitive to rises in transport prices. “It means that if rates increase too much, then they will be frozen out of the market,” he said. All in all, Drewry expects eastbound container trade to surge eight percent this year to 1.83 million teus, on top of 2004’s jump of 7.3%. Growth in 2006 will probably be a more moderate 4.1%, according to Fossey. Westbound expansion will be smaller, but still solid, Fossey said. Growth rose from 1.2% in 2003 to 4.1% in 2004, and is projected to hit 3.8% this year for a total of 2.38 million teus. Drewry expects growth to slow to 2.5% in 2006. Fossey explained, however, that increased trade is not the bi