TSA lines seek to manage container capacity

Seoul: The Transpacific Stabilization Agreement has requested the Federal Maritime Commission to permit the discussion agreement's members to discuss and agree on management of carrier capacity in the eastbound trans-Pacific trade, writes The Journal of Commerce Online. The TSA on Dec. 18 filed an amendment to its agreement on file with the FMC. The amendment would give members the authority to discuss and agree on "cost savings and more efficient use of vessel and equipment assets and networks."

Under the amendment, this would be done through "coordination of the members' capacity plans, layup, drydocking, or other off-hiring of vessels, rationalization of vessels and/or vessel capacity operated, or planned to be operated...or of feeder vessels." The proposed cooperation also would cover space charters among TSA members.

The TSA's 14 members carry about 85% of containerised cargo in the Asia-to-U.S. trade. The group's members are APL, China Shipping Container Lines, CMA CGM, Cosco, Evergreen, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, "K" Line, Mediterranean Shipping Co., NYK Line, Orient Overseas Container Line, Yang Ming Line and Zim Integrated Shipping Services.

The expanded cooperation is a sign of TSA members' difficulties. Carriers have been hit by slowing volumes and an increase in capacity resulting from deliveries of scores of large, new ships.

Last October, the TSA issued a forecast saying that cargo demand for 2008 could fall by as much as 8%, and that a turnaround wasn't likely until the second half of this year. More recent forecasts by industry leaders have been even more pessimistic.

The TSA's capacity management amendment, scheduled to take effect February 1, could be controversial. In the mid-Nineties, cargo interests objected vehemently to capacity management by rate-setting conferences, especially in the trans-Atlantic trade. [07/01/09]

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