[EN-SEA] "TSA" Lines Offer Upbeat 2010 Asia - US Trade Forecast

As the Asia - US freight market begins to gradually improve heading into 2010, the Transpacific Stabilisation Agreement (TSA) is pressing ahead with revenue improvement efforts, along with internal changes intended to expand direct member line involvement as the Agreement addresses long-term challenges facing the transpacific trade.

TSA lines' optimism is based on a combination of economic indicators and forward bookings during the off-season Lunar New Year period. With 2009 cargo demand likely to fall 15-20% below 2008 levels, carriers are looking forward to a significant year-on-year increase in 2010 traffic.

Among the factors contributing to a positive forecast are rising US consumer confidence and spending, and the need for retailers and other businesses to replenish inventories and upgrade physical and technology infrastructures.

Forward bookings by the individual TSA lines suggest that vessel utilisation levels in the trade will remain in the mid-high 90% range in most trade segments in the coming months, with a typical dip for the Lunar New Year period in Asia when factories are closed but picking up quickly after that.

"Carriers face difficult choices throughout 2010, as they ramp up their networks to meet service demand," said TSA chairman Ronald Widdows. "At the same time they will have to precisely calibrate their fleets and schedules to control costs, and also make long-term strategic decisions relating to market focus, network productivity, environmental mitigation and other factors."

He added that TSA carriers have embarked on a multi-year process focused on improving the economics of the trade, with the aim of achieving rate levels that will enable carriers to make the investment decisions required to meet customers' long-term supply chain needs.

TSA carriers' short-term focus remains revenue improvement in the second half of the 2009-10 contract year, with many rates in major commodity segments down $1,000 or more per 40-foot container from late 2008 levels.

TSA reported that member lines are actively pursuing a previously announced Emergency Revenue Charge (ERC) and that carriers are seeing a high degree of success leading up to the January 15, 2010 effective date.

"The bottom line for transpacific operators is to gradually fine-tune their operations, moving from an environment of contraction to one of preparing for growth," said Widdows. "That adjustment begins with a stable revenue foundation for gradual reinvestment in the trade. The ERC is a positive first step towards recovery in 2010, and lays important groundwork for the critical general rate increase to follow in the 2010-11 round of contracts."

Meanwhile, Widdows has stepped down after serving for the past three years as TSA chairman. Effective January 14th, Hanjin Shipping president & CEO YM Kim will take over as TSA chairman for 2010.

Furthermore TSA executive committee membership will be expanded from four to six lines, with Maersk Line and OOCL joining APL, Evergreen, Hanjin and NYK Line.

TSA members include:

• APL
• China Shipping Container Lines
• CMA-CGM
• COSCO Container Lines
• Evergreen Line
• Hanjin Shipping
• Hapag-Lloyd
• Hyundai Merchant Marine
• K-Line
• Maersk Line
• Mediterranean Shipping Co.
• NYK Line
• Orient Overseas Container Line
• Yangming Marine Transport
• Zim Integrated Shipping Services

Source : EFT, 22.01.10.