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Thursday, October 18 2018 @ 05:46 AM UTC

Asia-Europe shipping traffic on fast growth route

Canal Expansion By T.E. Raja Simhan for The Hindu Business Line - If the US sneezes, the Asian maritime industry catches cold. That is the level of dependence on US, especially for countries such as India and China. But things could change in the next few years with demand from Europe increasing. Large container ships have already started plying between Asia and Europe. It appears that Asia-US container traffic grew to the order of 6.9 per cent in the first half of 2007, rising to around 8 per cent for the first nine months, relative to the same period in 2006. Analyst forecasts predict, on average, similar or slightly higher cargo growth for 2008. (more)

Editor's Comment: Before you rate this article a "1" because it has nothing to do with hookers, remember that this is Panama, the home of the Panama Canal, and there are hundreds if not thousands of people who watch these issues pertaining to the international movement of containers like hawks.

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That is slower than the 9.6 per cent growth posted for the full year 2006 to 6.5 million 40-foot containers, but it, nonetheless, reflects considerable resilience among US consumers, amid uncertainty over sub-prime mortgages, home values, tightening credit, high gas prices and a weak dollar, according to the Transatlantic Stabilisation Agreement (TSA).

The TSA is a research and discussion group of 14 major container shipping lines offering ocean and inland transportation, logistics and supply chain services from Asia to the US.

An official of a leading shipping line in Chennai says problems such as lack of infrastructure in the US and security-related issues at US ports are also factors that will shift focus to Europe, from the US, in the coming years.

Effective capacity

Asia-Europe container trade was 15.8 million TEUs (twenty foot equivalent unit) in 2006 and will more than double to 35 million TEUs by 2016, according to Drewry Shipping Consultants, a global maritime research company.

The TSA says that most credible industry analyst reports predict effective vessel capacity through 2008 within 1-2 per cent of cargo demand in the transpacific market — a marked contrast to significant overcapacity seen in previous years. There are several reasons for this, despite a global market in which reported container ship tonnage has grown by 12-15 per cent annually in recent years.

Analysts now acknowledge that rated vessel carrying capacity — the maximum number of containers that can be loaded onto a ship as rated and expressed in 20-foot container equivalents (TEUs) by shipyards building those vessels — is typically inflated, the TSA said.

No 8,000-TEU ship will ever carry 8,000 20-foot containers. Capacity is moderated by multiple operational factors — the mix of container sizes aboard ship; balancing and weight limitations; visibility from the ship’s bridge; load and discharge sequence; berth and channel drafts at most US ports. New 8,000-TEU, 10,000-TEU and larger ships being delivered to global carriers are not deployed in the transpacific market, but rather to the Asia-Europe and intra-Asia trade lanes, where demand growth is much higher and ports have the berth drafts and yard capacity to handle the larger vessels.

The average vessel size deployed in transpacific service is 6,200-TEU, typically carrying fewer than 3,000 containers, due to port and terminal constraints. Average vessel size through the Panama Canal to the East Coast is even smaller — no more than a 4,500-TEU capacity, carrying fewer than 2,000 containers, the TSA said.

It will be at least another three years before US port terminals raise their productivity from the current 5,000 TEU per acre per year capability to the 10,000 needed to match current productivity levels at Asian ports and effectively handle import cargo growth expected over time.

The Panama Canal is currently operating at or near capacity and is on a container ship reservation system that also commands premium transit fee pricing. US railroads are insisting that they will not fund costly new network improvements — double track, locomotives, switching, inland yard expansions — that cannot either pay for themselves through the pricing structure or for which they cannot receive public support such as investment tax credits.

Cost Concerns

Transpacific container lines foresee a minimum 7 per cent increase in basic operating costs in 2007, on top of an 8 per cent increase that went mostly unrecovered in 2006. And this does not include marine fuel costs, which rose from an average $295 per tonne at the beginning of 2007 to more than $500 per tonne in November. Fuel today accounts for 50-60 per cent of total transpacific sailing costs.

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