If rate rises prove too sticky, expect surcharges: analysts

TRANSPACIFIC strings might not be able to raise freight rates when renewing service contracts this spring, carriers could impose peak season surcharges instead, according Container Forecaster editor Neil Dekker, of London's Drewry Shipping Consultants.


"On the transpacific, on the contracting side, I can't see the carriers getting anymore than they did last year," said Mr Dekker at the Transpacific Maritime Conference in Long Beach sponsored by Newark's Journal of Commerce.


"The GRI [general rate increase] negotiations coming up in May - we think there is a bit too much capacity in the system. There are six new services coming and there will be cascading from the Asia-Europe trade as well. I can't see utilisation factors getting to be more than 90 per cent. So carriers are going to have trouble getting their GRI through."


Transpacific Stablisation Agreement (TSA) chairman YM Kim, also CEO of Hanjin Shipping, said annual capacity would increase 12.6 per cent versus the 2010, but for the peak season from August to October, capacity would only rise 7.3 per cent.


Similar forecast was shared by Alphaliner analyst Tan Hua Joo, who expected the capacity of 2011 would be up 14 per cent year on year and the growth in third quarter would be 9.5 per cent compared to 2011.


He believed the capacity has to exceed 95 per cent to allow a rate increase and the "forward freight rates suggest the market does not believe 2011 rates will reach 2010 levels."


Agreeing, PIERS service economist Mario Moreno said eastbound transpacific box volume would rise 8.2 per cent in 2011 while the westbound would increase by 11 per cent.
(Source:http://www.schednet.com)