Trans-Pacific Carriers Predict Strong Volume
However, as the lines enter service contract negotiations with their customers, they noted that market conditions in the largest U.S. trade lane remain uncertain. The Transpacific Stabilization Agreement, a discussion group of 15 carriers in the eastbound Pacific, met last week in Taipei and projected that cargo volumes will remain strong into April. The forecast becomes a bit hazy after that.
"The market forecast that matters most will be found in the volume commitments, service features and rate levels negotiated in upcoming contracts," said Brian Conrad, executive administrator of the TSA.
Carriers are entering into negotiations with retailers and other importers for annual service contracts that will take effect on May 1. Those contracts will include freight rates and terms of service to be provided by carriers.
Last fall, the TSA indicated that in order to work back toward profitability in 2010, carriers needed rate increases of $800 per 40-foot container for cargo moving to the West Cost, and $1,000 per-FEU for intermodal shipments and all-water cargoes moving to the East Coast.
Even if they achieve those increases in the current round of contract negotiations, which would bring some freight rates back to 2008 levels, rates would be "barely compensatory," the TSA said.
Drewry Shipping Consultants estimated that carriers last year lost in aggregate $15 billion to $20 billion in their global operations, and would incur an additional $7 billion in losses in the first quarter of 2010.
TSA described the $400 per-FEU emergency rate increase that many carriers implemented on Jan. 15 as a "stopgap measure" to provide interim relief for carriers under contracts that will expire on April 30.
Also at the Taipei meeting, the TSA members stated they are committed to relieving the short-term capacity shortages that caused shipments to miss their intended sailings during the run-up to Chinese New Year in mid-February. The capacity problems are already beginning to ease, the TSA said.