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Asian port congestion may tighten tonnage, warns TSA.

Asian port congestion may tighten tonnage, warns TSA.

Hong Kong: The Transpacific Stabilization Agreement (TSA) member container lines have warned that booming intra-Asia and Asia-Europe trade growth and port congestion, particularly in Shanghai, Hong Kong, Singapore and Colombo, may lead to tightening of tonnage in October, "with spillover effects likely heading into 2008."

TSA has reported consistently high ship utilization numbers since May and states that "the overall trend suggests a resumption of strong cargo growth" Member lines saw a healthy increase in shipments, which may partly be related to July 1 changes in Chinese export subsidies. " June liftings by TSA carriers totaled more than 370,000feu, up 16.4% from the 318,000feu carried in June 2006. Average vessel utilization was 95.6% versus 92.4% in June 2006," the organisation said in a statement, adding that member lines "are currently averaging 95% vessel utilization or higher from Asia on all route segments, with ships running essentially full on the highest volume North and South China service strings."

Based on forward bookings, TSA expects the trend to continue into August, and anticipates record eastbound transpacific volumes by October.

Demand for all-water service to the U.S. East Coast via the Panama Canal continues to outpace demand via the U.S. West Coast, as customers build in supply chain flexibility to manage the risk of 2008 West Coast labor disruptions and cope with inland rail capacity challenges. TSA lines individually expect to add nearly 70,000 FEU in East Coast all-water (ECAW) capacity during 2007 to accommodate increased demand in 2008.

 "In spite of the dynamics affecting the U.S. stock markets, forward forecasts from our customers indicate a healthy second half for the container shipping sector, with Asia-U.S. volumes recovering and ultimately posting healthy growth over the remainder of the year." said Ron Widdows, TSA chairman and APL ceo, adding that supply chain disruptions from Asia port congestion, labor slowdowns, and truck and inland rail cost increases and capacity availability posed a greater threat then weakening market.

"The Asia-U.S. supply chain infrastructure is essentially operating at capacity right now," Widdows explained. "Cargo is flowing reasonably smoothly in the U.S. at the moment, even as Asia experiences real challenges. There isn't a lot of margin for error in the system."

TSA members include: Evergreen Marine Hanjin Shipping, APL, NYK Line, Cosco, MOL, OOCL, "K" Lines, Hyundai Merchant marine and Yang Ming Transport.  [10/08/07]