Trade News > Maritime News > Trans-Pacific Carriers Elect New Chairman

Trans-Pacific Carriers Elect New Chairman

Peter T. Leach | Jan 14, 2010 2:35PM GMT

The Journal of Commerce Online - News Story

Hanjin CEO to take over as carriers seek stronger grip on container rates

The Transpacific Stabilization Agreement on Thursday elected Kim Young Min, president and CEO of Hanjin Lines, as the new chairman of its executive committee, replacing Neptune Orient Lines CEO Ron Widdows.

Meeting in Singapore, the TSA’s executive committee also voted to formally accept the application of Maersk Line to rejoin the discussion agreement, bringing the number of member carriers to 15.

The executive committee also voted to expand its ranks by adding Maersk and OOCL to the committee, which brings its total up to six, including current members, APL, NYK, Hanjin and Evergreen.

The changes at the TSA come at what container shipping industry officials believe is a critical point for carriers.

Following the worst year of decline the industry has seen in more than 50 years of containerized trade, carriers are facing forecasts of consolidation and the potential demise of some operators. Container lines have announced a range of rate increases aimed at getting revenue streams back up to profitable levels and the expansion of the executive committee at the TSA, which can recommend but not enforce rate actions, may bolster the influence of the group.

Kim, the new TSA chairman, worked at Citibank for two decades before joining the Hanjin Group in 2001 as CEO of Total Terminals International, Hanjin’s terminal operator in the U.S. He moved to Hanjin as senior vice president in 2004 and then became chief operating officer.

When the executive committee was first formed to run the TSA in January 2007, the position of chairman was supposed to change on an annual basis, but Widdows, who was then the CEO of APL before becoming CEO of its parent NOL, has remained as chairman for three terms, during which time the group established a stronger consultative relationship with shippers and gained mare credibility with them.

“It’s now time for somebody else to have an opportunity,” Widows said this week.

He said the changes in the executive committee’s leadership and its expansion will make it the group that frames the TSA policy direction and initiatives. “It speeds decision-making in terms of developing issues and guidelines. It will engage more carriers in advance of getting to the point of decision-making,” Widdows said.

“With the addition of five carriers over the last couple of years, including CMA CGM, MSC, China Shipping and Zim, with Maersk being the last, all of the carriers that are material to shipping from Asia to the U.S. are now in the room,” he said.

So it is someone elses turn in the barrel, so to speak. In all seriousness, I give a lot of credit and respect to Ron Widdows for being the face of TSA and in most instances getting more grief than credit in return. Folks like the Asian Shippers Council not only criticize all TSA actions (absent when rates go down), some in the organization will actually hold the carrier who heads up the group responsible. That's primarily why in the past there were Conference or Agreement Chairmen, someone who would take the heat in public while delivering messages to cargo interests that no carrier wanted to front. TSA changed those dynamics and Ron Widdows did the honerable thing in first taking on the assignment and then remaining in place through a very difficult set of circumstances - initially telling the world that the carriers were making money and thriving (relative term) and needed to do so to be able to continue to invest the capital required to provide more services and keep costs under control. Then having to tell the world that the rates and revenue levels were not going to sustain the industry and increases were needed; to the surprise of many, a lot of the increases of the last year did stick in extremely poor market conditions, mostly acts of self preservation but also because Mr. Widdows was able to hold together the group and get them to act in a more pragmatic business like manner.
There are still extreme conditions in the industry and it will not be easy for them all to survive, indeed highly unlikely that they all will survive. It then comes down to how do those who go out, go out? Can TSA leadership continue to keep the group heading in the right direction and not have those going out take actions that damage those who survive. A big challenge.

- By Kingston4811 on 1/14/10