LONG BEACH, Calif.--The supply of vessel capacity and demand for space on the trans-Pacific will be so close this year it could tip in either direction, toward oversupply and lower freight rates or tight space and higher rates, according to panelists here Monday at The Journal of Commerce's 11th Annual Trans-Pacific Maritime Conference.
Kim said global containership capacity will increase 7 percent during this year's peak season compared to the last peak season. But he said most of the expansion this year will consist of vessels with capacities of more than 10,000 20-foot equivalent units that will be deployed on the Asia-Europe trade.
"Some vessels will cascade onto the trans-Pacific, but the number is not that different between supply and demand," he said.
Tan Hua Joo, executive consultant with Alphaliner, projected 8.7 percent industry-wide capacity growth this year and 14 percent capacity growth on trans-Pacific services. He said carriers are reaching the limit of the excess capacity they can absorb through slow-steaming.
"It is still not clear if 2011 demand growth can absorb the large new ships that can only be used on the Asia-Europe and trans-Pacific trades," he said. "We are looking at a significant increase in trans-Pacific capacity, which is larger than the Transpacific Stabilization Agreement expects."
He said carriers can only increase freight rates when vessel utilization is higher than 95 percent, as it was last year, but the addition of new capacity on the trans-Pacific has fallen into the mid-80 percent range. Carriers have "meager" prospects for substantial rate increases this year, he said.
Mario Moreno, chief economist of The Journal of Commerce, predicted that the growth in trans-Pacific import volume will slow to 8 percent this year from 16 percent last year. But he is forecasting that trans-Pacific export growth will accelerate to 11 percent this year from 4.3 percent in 2010.
-- Contact Peter T. Leach at firstname.lastname@example.org.