Asia-US cargo growth slows while costs continue to rise, warns TSA

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

31 Oct 2007

Asia-US container cargo growth slowed in 2006, growing at 9.6 per cent to nearly 6.5 million FEU from 5.9 million FEU in 2005 while a wide range of costs continued to rise, said a communique from the Transpacific Stablization Agreement (TSA). ''Strong China export growth continued in 2006, with spill over in Vietnam, Singapore and the Philippines. Japan and Korea posted steady, modest gains, while Taiwan trade growth was divided, with a large volume of manufactured trade now originating in northeast China,'' said the statement from the TSA, a group headed by Ron Widdows, also CEO of APL, the container shipping arm of Singapore's Neptune Oriental Line. But costs continue to rise, according to the exhaustive TSA analysis, which predicted an overall minimum seven per cent increase in operating costs in 2007, on top of an eight per cent increase that went mostly un-recovered in 2006.''Fuel costs doubled between January 2005 and May 2006 and remain more than 50 per cent above those initial levels. This has increased one-way per sailing costs to more than US$800,000, and to more than $1.2 million when repositioning of empty containers is taken into account,'' said the TSA statement.''Several other potentially major cost elements are unknown: Cargo security compliance, cargo scanning, harbour worker identification cards, radio frequency identification and other technologies are mandated and rolled out; environmental compliance as vessels, trucks and yard equipment switch to cleaner fuels and electric power and continued development of information systems to manage shipment visibility and time-definite services,'' according to the TSA.''Railroads and trucking companies have aggressively pursued inland diesel fuel surcharges in their pricing, which are often paid by the ocean carrier as the lead transportation/logistics provider. In 2006, record rail revenues were largely attributable to fuel surcharges.''But shipping lines,'' said the TSA, ''have not recovered anywhere near their full costs related to fuel, either as stand-alone charges or otherwise through the rate structure, and will be under intensified pressure to do so in 2007-08.''