Risk of transpacific space shortages recedes
The likelihood of serious space shortages and cargo roll-overs during the peak season has receded somewhat.
Although shippers and carriers continue to expect some capacity problems this summer and fall, the latest trends in supply and demand point to a closer alignment than expected previously.
Aaron Young, junior vice president at Yang Ming, said that he sees “no serious problem of cargo roll-overs.”
The rate of growth of eastbound traffic volumes this year slowed from about 20 percent in the first quarter to less than 10 percent in April and May. In May, the ports of Los Angeles and Long Beach handled a combined inbound loaded box traffic of about 537,000 TEUs, up 6 percent on May 2002. June volumes were also weaker than predicted, but July should have high volumes, according to APL.
According to industry sources, cargo growth will be much less than 20 percent during the peak season, and will probably amount to about 10 percent.
Certain carriers have warned that the rising eastbound transpacific volumes and a tight vessel supply could mean insufficient capacity this summer.
“I think there will be space problems,” said Bob Sappio, head of the transpacific trade at APL. The New World Alliance of APL, Hyundai and MOL has recently added two Pacific services — one to the U.S. West Coast and one all-water link to the U.S. East Coast. Last year, shippers and forwarders faced shipment delays and chronic cargo roll-overs, as Pacific imports to the U.S. exceeded available ship capacity.
“Even with the many services that have been added this year, particularly to the U.S. East Coast, we believe supply and demand will still be in favor of the carriers,” Sappio said.
“Many customers we talk to ask us about capacity,” he added.
A report by the global liner shipping database ComPair Data said on Tuesday that transpacific container carriers have added about 13 percent in extra eastbound ship capacity since April. Weekly transpacific capacity amounted to about 252,000 TEUs on July 1, 13 percent more than on April 1, and 12 percent up on the 225,000 TEUs of weekly ship capacity in July 2002 according to ComPair Data, a partner of American Shipper Magazine.
Most carriers expect very high vessel load factors during the peak season. OOCL’s current load factors on the eastbound transpacific trade are about 95 percent. The peak season, now just starting, is expected to last until about October.
Wal-Mart has reportedly predicted increases in its transpacific imports to the United States during the peak season.
Stanley Shen, general manager of marketing at OOCL, said that the SARS outbreak may have postponed orders from China by U.S. buyers, and affected the pattern of this year’s peak season.
“Come the peak season, there will be tightness of space,” he said. The peak season this year may last between two and a half months and four months, Shen predicted.