Analyst predicts raft of new services could lead to overcapacity, but TSA pushes for rate rises
The transpacific trade is set for a “major influx” of new services this year, but one analyst has warned the trade this could lead to overcapacity.
Paris-based AXS Alphaliner said deepsea shipping lines were expected to launch several new services between Asia and the US in April because they expect strong growth.
The Transpacific Stabilisation Agreement (TSA) recently revealed it expected volumes on the trade to increase 7% to 8% this year, following 15% growth last year.
However, Alphaliner said capacity growth would surge ahead of volume growth, which could impact carriers’ plans to increase rates.
Alphaliner said: “The TSA’s optimistic [volume] projections appear to be backed by the strong eastbound cargo volumes from the Far East to the US in January, which grew by 15.8%, boosted partly by an earlier lunar new year this year.
“However, utilisation levels remained well below last year’s levels.
“The capacity growth trend will continue this year, with our annualised capacity increase forecast at 14%, higher than the 8.8% [volume] growth predicted by the TSA.
“Vessel utilisation levels have fallen below 90% since October and remained relatively weak in January, due to the 25% year-on-year increase in capacity deployed on transpacific routes.
“The weaker-than-expected utilisation levels will have a negative impact on the transpacific carriers’ attempt to raise freight rates for the 2011-12 season.”
Alphaliner estimated the average load factor for services to both US coasts was 89% in January, while the TSA reported load factors of 88% to the west coast and 95% to the east coast.
This year, transpacific carriers claimed that rate hikes planned for 2011 would be justified by growing cargo demand, while late vessel deliveries and equipment shortages could temper predicted capacity increases.
Spot rates on transpacific trades have been falling since last summer, but the TSA has recommended a rate increase of US$400 per feu eastbound to US west coast ports from May.
The TSA’s voluntary guideline contract recommendations also call for a rate increase of $600 per feu on all other destinations, full recovery costs of other equipment sizes and stricter collection of fuel charges and Panama Canal, Alameda Corridor and other fixed access fees.
Damian Brett | Wed, 16 Feb 2011 . IFW News