The New World Alliance to reduce number of transpacific vessels soon

Coinciding with the Lunar New Year celebrated in Asia next month, several major ocean carriers will be withdrawing capacity on the Transpacific.

Spokesmen for The New World Alliance (TNWA) – comprising APL, Hyundai Merchant Marine and Mitsui OSK Lines – noted that factory shutdowns during the holiday warrant the temporary carrier reduction.

The announcement comes at a time when industry analysts are concerned about too much existing capacity in all trade lanes.

Drewry Shipping Consultants, Inc. in London believes that the industry has emerged from the global recession with both carrier profitability and demand figures recovering. But analysts there beg the question: have the carriers learned from their experience?

The fact that no major companies “went to the wall” still seems to have insulated the industry from the despair of 2009 and there is now the feeling that perhaps the dark days did not happen,” said Neil Dekker, editor of the Drewry Container Forecaster.

In essence, Drewry observes that it is back to normal operating conditions.

“Perhaps the biggest carriers are happiest with no long-term profitability as long as they have market share. However, the utopia of freight rate stability sought by shippers seems a long way off if carriers abandon their short-lived prudence and profitability,” said Dekker.

Dekker cautions that, “Just before the crucial contract re-negotiation period, carriers are passing any aces to their customers once again, but shippers maintain that they do not necessarily just want low rates – they also want a sufficiently reliable service. The Federal Maritime Commission is also suggesting that both parties talk to each other more, but unfortunately, it seems that some carriers are not necessarily heeding this message. However, it is also time for shippers to bring more detail and information to the negotiating table and anecdotally we hear that this process is starting to happen.”

Donald Pisano, the newly-appointed chair of the Ocean Transport Committee for National Industrial Transportation League, said his organization will also be monitoring the situation closely.

“We would like to see continued momentum in freight policy reforms ensuring adequate vessel and equipment capacity to meet the transportation needs of our members,” he told LM.