Trans-Pacific capacity, rates uncertain; container shortage likely

According to the Journal of Commerce, it’s nearly impossible to predict whether the supply of vessel capacity will mesh with the demand for space on trans-Pacific vessels.   Panelists at JOC’s 11th Annual Trans-Pacific Maritime Conference concluded that the balance “could tip in either direction, toward oversupply and lower rates or tight supply and higher rates.”    Factors influencing the supply/demand balance include introduction of new vessels, where those vessels are put in service, carriers’ ability to absorb 2010 demand growth, and vessel capacity rates, which have fallen to the mid-80% range since 2010.  See the full article,  “TMP Panel Debates Capacity Outlook.”

“This is a most confusing market,” said Ed Zaninelli, vice president of westbound service at Orient Overseas Container Line, said at the conference.  For example,  carriers of US exports across the Pacific are seeing declining freight rates, even though demand is strong.  This is due to a glut of shipping capacity from the US West Coast to Asia, a result of unexpected increased imports from Asia  through January 2011 and a resultant oversupply of vessels now in areas such as Los Angeles and Long Beach.  See the full article, “Trans-Pacific Exports Grow But Rates Fall.”

Nevertheless, one area of certainty is that there will continue to be a shortage of containers.  As reported in this blog on February 15, container manufacturers slowed production in response to weakened demand during the onset of the global economic slowdown, but still are having trouble meeting increased demand as the economy improves.  Some predict this shortage will drive up freight rates.  See the full article, “Carriers Face Renewed Container Shortage.”

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