The Westbound Transpacific Stabilization Agreement loses APL

The Westbound Transpacific Stabilization Agreement (WTSA) is losing another member, as APL Ltd. announced its withdrawal effective September 1.

By ·

The Westbound Transpacific Stabilization Agreement (WTSA) is losing another member, as APL Ltd. announced its withdrawal effective September 1.

Remaining members comprise Hapag Lloyd, COSCO, K Line, Evergreen, Hanjin, Yangming HMM, OOCL and NYK.

APL spokesmen in Singapore indicated that cost of membership was not justified in the current “overcapacity” marketplace.

WTSA executive administrator, Brian M. Conrad told LM in an interview that demand will eventually rise and come into line with supply.

“Most estimates show that happening in the next 2-3 years. The question is how effectively carriers will manage assets and pricing in the meantime.”

Conrad added that the WTSA does not influence or manage vessel capacity decision making – that is a function purely for individual carriers based on their internal economics and objectives.

“That said, capacity imbalances have existed in global trade lanes for centuries. It is an inevitable condition of the industry,” said Conrad. “Scheduled carriers invest in ships and equipment over a 25-year time horizon while their principal revenue stream is freight rates based on 90-day bookings and 12-month contracts.”

Conrad added that recent decisions to purchase ships and container equipment are based on long-term economic and competitive factors – expanding global trade, high fuel costs, pursuit of lower slot costs through scale – along with external considerations such as favorable shipyard terms, cost of capital and exchange rates.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Ocean Cargo · Ocean Freight · Trade · All Topics
Latest Whitepaper
Identify Cost Savings with Real-Time Visibility
To offset the impact of late shipments, unreported delays and detention, shippers are increasingly requiring 100 percent visibility into the location and status of their freight.
Download Today!
From the August 2017 Logistics Management Magazine Issue
Which carriers, third-party logistics providers, and North American ports have crossed the service excellence finish line ahead of their competitors? Our readers have cast their votes, and now it’s time to introduce this year’s winners of the coveted Quest for Quality Awards.
BMW Takes the Inland Road to Efficiency
Global Logistics: No Shortcuts to Security
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Getting the most out of your 3PL relationship
Join Evan Armstrong, president of Armstrong & Associates, as he explains how creating a balanced portfolio of "Top 50" global and domestic partners can maximize efficiency and mitigate risk.
Register Today!
EDITORS' PICKS
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...
2017 Top 50 3PLs: Investment and Consolidation Maintain Traction
The trend set over the past few years for mergers and acquisitions has hardly subsided, and a fresh...

2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...