Bill Mongelluzzo | Jun 30, 2010 4:39PM EDT
Cargo projections by retailers indicate that U.S. imports from Asia will remain strong at least into the autumn peak-shipping season, and that could mean a continuation of the container shortage that has plagued importers in recent months, according to a top shipping executive.
Frank Baragona, president of CMA CGM (America), said retailers that have shared their cargo projections for the coming two months are confident that imports from Asia will remain strong as the trade transitions to the peak-shipping season.
Baragona was interviewed in Los Angeles where he was on hand to view the maiden voyage of the 8,500-TEU CMA CGM Figaro, the carrier's largest containership ever to call at a U.S. port. The vessel, like others in the booming eastbound Pacific trade, arrived with a full load of cargo.
Container manufacturers in China shut down their factories and sent their workers home during last year's global trade recession. When cargo volumes unexpectedly surged late last year, a severe shortage of containers emerged in Asia.
Although the U.S. economic recovery is fragile, bookings and cargo projections for the next 60 days indicate there will be no drop-off in imports from Asia, and Baragona said he believes volumes will increase even further during the September-October peak season.
Container manufacturers in China have steadily ramped up production, but they can not keep up with the growing cargo volumes in the major trades linking Asia with North America and Europe.
On a brighter note, carriers are bringing back a number of trans-Pacific services that they had laid up during the winter months, so those shippers that can secure containers are no longer having their shipments "rolled" to subsequent voyage because of a shortage of vessel capacity.
"I'm hearing less noise about cargo being rolled than I heard over the past 30 days," Baragona said.
Shipping lines raised their freight rates in the service contracts that took effect on May 1, and a number of carriers, including CMA CGM, filed for a peak-season surcharge in June. Some lines have already filed with the Federal Maritime Commission their intention to levy a second peak-season surcharge to take effect in July or August. Baragona said CMA CGM is reviewing the situation, but has not decided yet if it will have a second peak-season surcharge.
The recent rate increases in the trans-Pacific have returned freight rates to break-even levels. Carriers last year collectively lost billions of dollars in their global operations. Even with recent rate hikes, though, freight rates are still below 2008 levels, Baragona said.
-- Contact Bill Mongelluzzo at bmongelluzzo@joc.com.
