Vessel utilization rates in early January in the eastbound trans-Pacific averaged 88 percent to the West Coast and 95 percent to the East Coast leading up to the Chinese New Year celebration, and trade volumes for the rest of 2011 will be strong beginning in late spring, according to a carrier discussion group.
The Transpacific Stabilization Agreement, which represents 15 of the largest carriers in the trade from Asia to the U.S., predicts that tight vessel space and equipment shortages could develop later this year when the eastbound Pacific enters the traditional peak shipping season.
Container volume in the eastbound Pacific rebounded strongly last year as the U.S. economy improved and the effects of the deep global trade recession of 2008-09 waned. The eastbound volume in 2010 increased 15 percent over 2009, according to the TSA.
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The carrier discussion group projects a volume increase of 7 to 8 percent in the eastbound Pacific in 2011. Vessel capacity in the trade lane will increase 8.8 percent this year, so supply and demand should be roughly in balance, the TSA stated in a release.
TSA said utilization rates for the fourth quarter of 2010 that were reported by its 15 member lines were higher than what some industry analysts had published. Vessels calling at West Coast ports in late October reached a high of 96 percent, falling to a low of 79 percent in early December.
TSA member lines calling at East Coast ports reported a high of 94 percent utilization in early October, with average utilization falling to 84 percent by the end of November.
As usually happens each year in January, utilization rates increase because factories in Asia fill a rush of orders before they close down for two or more weeks for the Chinese New Year celebration. Chinese New Year was somewhat early this year, beginning on Feb. 3.
Utilization rates will remain strong for the next couple of weeks as the vessels that left Asia in early February arrive at U.S. ports. There will then be a noticeable drop in container volume for the ensuing month.
Y. M. Kim, president and chief executive officer of Hanjin Shipping, predicted a return to "robust trade flows" beginning in late spring. The eastbound trade should increase at 7 to 8 percent in 2011 on top of the strong cargo base of 2010, Kim said.
In this environment, carriers must balance the need to generate revenue to reinvest in their transportation networks while seeking "fair, stable prices," Kim added.
Equipment availability, which was a problem through much of 2010, could be problematic again this year. According to TSA, container manufacturers in China are operating at about half of the peak production rate they reported in 2008. The container manufacturers by the end of 2011 should produce close to 3 million units, TSA stated.
-- Contact Bill Mongelluzzo at email@example.com.