Executive Briefings

Cargo Levels From Asia Look Stronger Than Ever. So Where's That Extra Ship Space?

It looks like another strong year for cargo shipments from Asia to the U.S. Figures for the first two months of this year, released by the Port Import-Export Reporting Service (PIERS), show cargo demand growth of better than 20 percent over the same period of 2005. According to member lines of the Transpacific Stabilization Agreement (TSA), the results were especially strong for shipments moving over California ports (up 19 percent in January and 21 percent in February) and to the U.S. East Coast via the Panama Canal (up 30 percent and 26 percent, respectively). Some of those figures might be subject to revision, but even a conservative estimate "suggests a very positive market outlook," said TSA. China, once again, was the main engine of growth. TSA executive director Albert A. Pierce noted that shipments from China to the U.S. grew by an average of 24 percent in January and February. What's more, nearly four months into 2006, vessel utilization among TSA carriers was hovering in the mid-90-percent range on the West Coast, and nearly 100-percent full via the Panama Canal. "Frankly," Pierce observed, "we could use some of that added vessel space that has some analysts so concerned, and we're not even at the peak season yet." Some analysts have predicted that container slots will be more plentiful than in the last several years, and that freight rates will start to drop, due to the introduction of new and bigger ships in 2006 and beyond. But Pierce believes ship capacity will remain "roughly in line" with cargo demand this year and into the next. At the same time, he said, carriers' operating costs will rise by at least 7 percent during 2006-bolstering TSA's argument that the industry needs even higher freight rates in order to remain healthy.

Visit www.tsacarriers.org or www.piers.com.

It looks like another strong year for cargo shipments from Asia to the U.S. Figures for the first two months of this year, released by the Port Import-Export Reporting Service (PIERS), show cargo demand growth of better than 20 percent over the same period of 2005. According to member lines of the Transpacific Stabilization Agreement (TSA), the results were especially strong for shipments moving over California ports (up 19 percent in January and 21 percent in February) and to the U.S. East Coast via the Panama Canal (up 30 percent and 26 percent, respectively). Some of those figures might be subject to revision, but even a conservative estimate "suggests a very positive market outlook," said TSA. China, once again, was the main engine of growth. TSA executive director Albert A. Pierce noted that shipments from China to the U.S. grew by an average of 24 percent in January and February. What's more, nearly four months into 2006, vessel utilization among TSA carriers was hovering in the mid-90-percent range on the West Coast, and nearly 100-percent full via the Panama Canal. "Frankly," Pierce observed, "we could use some of that added vessel space that has some analysts so concerned, and we're not even at the peak season yet." Some analysts have predicted that container slots will be more plentiful than in the last several years, and that freight rates will start to drop, due to the introduction of new and bigger ships in 2006 and beyond. But Pierce believes ship capacity will remain "roughly in line" with cargo demand this year and into the next. At the same time, he said, carriers' operating costs will rise by at least 7 percent during 2006-bolstering TSA's argument that the industry needs even higher freight rates in order to remain healthy.

Visit www.tsacarriers.org or www.piers.com.