TSA sees ôstrengthening market conditionsö
The Transpacific Stabilization Agreement, which represents 11 major container shipping lines serving the trade from Asia to the United States, said it 'projects strengthening market conditions in 2007 for ocean carriers in most of the world's major trade lanes.'
'While it is still very early in the year, one can see considerably improved market conditions developing in 2007, based on the dynamics in the Transpacific trade,' said Ron Widdows, TSA executive committee chairman. 'The trend clearly shows a stronger market than many perceived, and our industry appears to be getting a bit smarter about how to manage its business in a challenging environment.'
In a statement released after a meeting in Hong Kong by members this week, the TSA said, 'Increasingly strong estimates of cargo demand and moderated estimates of capacity growth will result in a significantly more balanced supply/demand relationship for 2007 than many forecast only a short time ago.'
The statement comes as many shippers are negotiating contracts that renew May 1.
The TSA gave several reasons for its optimism:
* Continued double-digit world trade growth, driven by Asian exports.
* Capacity growth estimates which point to 'a more balanced supply/demand relationship for the 2007-2008 contract year.' It noted carriers are taking steps to 'adjust their capacity to reduce cost and better align with market demands, not just in the slack season but throughout 2007.'
* 'Recognition by carriers and customers alike that the cost pressures impacting landside delivery costs have increased dramatically over the last two years.' TSA said U.S. railroads have raised intermodal freight rates as much as 30 percent in 2006 with more increases to come for some.
* 'Broad awareness of the poor financial results that most carriers in the industry sustained in 2006' and the need for improved profits if carriers 'are going to be able to reinvest to efficiently handle the growth in container trade volumes going forward.'
TSA members are APL, 'K' Line, COSCO, MOL, Evergreen, NYK, Hanjin, OOCL, Hapag Lloyd, Yangming and Hyundai.