TSA lines withdraw capacity discussion amendment

   A discussion agreement representing 14 transpacific container shipping lines said Tuesday it will not pursue an amendment to its agreement on file at the Federal Maritime Administration that would have allowed them to discuss controlling capacity in the Asia-U.S. trade.

   The Transpacific Stabilization Agreement filed the amendment to its agreement on file at the FMC on Dec. 18, to take effect Feb. 1, absent any further commission action after a 45-day review period. The proposed changes sparked objections from groups representing shippers and intermediaries such as the National Industrial Transportation League and National Customs Brokers and Forwarders Association of America.

   The FMC instead issued a formal request for additional information in late January, triggering another minimum 45-day delay.

   This would put the effective date of the amendment into late March or April at the earliest, TSA executive administrator Brian M. Conrad told the FMC in a Feb. 9 letter. Since this amendment provides only for discussion authority, and contemplates a further amendment if a program is agreed to, the effective date of any program would then be pushed well into the summer. 

   As the challenges facing the carriers continue to mount, time is critical, Conrad said. Given the commission's decision to delay the effectiveness of the amendment and the attendant uncertainties that have been created, the members believe that the benefit of this discussion authority, which is urgently needed, is severely diminished. TSA chairman Ronald D. Widdows said TSA members are disappointed by the regulatory delay, and the inability to at least discuss options for addressing transpacific capacity challenges.

   The current global financial crisis has created a severe overcapacity situation and threatened transpacific carriers' financial stability, said Widdows, who is chief executive officer of Neptune Orient Lines, the parent of APL, the world’s seventh-largest container shipping company and a TSA member. Earlier Tuesday NOL reported a fourth quarter loss of $149 million. 

TSA members remain convinced that today's unprecedented trade conditions justify exploring a coordinated approach to more efficient use of vessel assets -- an approach that ensures adequate service levels while permitting carriers to operate more efficiently, Widdows said. TSA fully intended for this amendment to broadly benefit the entire industry -- shipper and carrier alike -- and was committed and prepared to continuously engage the shipper community as we moved through the process. In addition to APL, TSA members are China Shipping Container Lines, CMA CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping Co., Hapag-Lloyd,    Hyundai Merchant Marine, “K” Line, Mediterranean Shipping Co., NYK Line, OOCL, Yangming Marine Transport Corp., and Zim Integrated Shipping Services.

Source: American Shipper