Ocean Transportation

The 14 ocean carriers that make up the Transpacific Stabilization Agreement (TSA) met in Taipei recently to take “initial soundings” of the market for cargo moving from Asia to the U.S. in 2008-09, the group said. Their findings suggested that volumes are on the rise and will likely continue through next year, despite concerns about a recession triggered by the moribund U.S. housing market. TSA lines carried 8.6 percent more containers in the month of July, compared with the same period of 2006. For the first half of the year, cargo volumes were up by an average of 7.1 percent—6.3 percent for shipments moving to the U.S. West Coast, and 9.9 percent to the East Coast. TSA carriers are predicting cargo growth of between 7 and 8 percent for all of 2007. “While growth has moderated a bit, first-half year-over-year growth remains healthy and we continue to hear from our customers that their projections for the balance of 2007 and into early 2008 are for the current growth trend to continue,” said TSA chairman Ronald D. Widdows. He said it’s too early to tell what impact problems in U.S. financial markets might have on the trans-Pacific market. Widdows described 2007 as “the year when long-term vessel capacity catches up with demand in the trans-Pacific market, after years of carriers and shippers alike underestimating the phenomenal growth that has taken place.” TSA has long disputed claims of excess vessel capacity in the trans-Pacific trade, a situation that would likely lead to lower freight rates if it were true. The group’s comments suggest that it will push for another round of freight-rate increases when service contracts come up for renewal next year.

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