Japan calls for change to liner routes

PUBLISHED : Monday, 27 June, 1994, 12:00am
UPDATED : Monday, 27 June, 1994, 12:00am

THERE can be no bright future for Japanese shipping firms unless the deficit-causing structure of liner trade routes is improved, says Japanese Shipowners' Association president Susumu Temporin.

Mr Temporin said the future of TransPacific trade, which continued to generate deficits, defied prediction as freight rates lingered at low levels owing to a surplus of tonnage.

Mr Temporin said that on North America trade, the volume of eastbound cargo from Japan and Asia to the west and east coasts of North America, which stood at 3.06 million 20-foot equivalent units (TEU) in 1991, rose by 10.1 per cent to 3.37 million TEUs in 1992 and further by 3.8 per cent to 3.5 million TEUs last year.

On the other hand, the westbound cargo from North America to Asia levelled off at about 2.4 million TEUs a year from 1991 to 1993.

As for the ship supply volume, the conference lines registered 2.61 million TEUs in 1992 and three million TEUs last year, up 15 per cent.

The independent carriers participating in the TransPacific Stabilisation Agreement (TSA) chalked up 1.02 million TEUs in 1992 and 1.35 million TEUs last year, up 32 per cent.

In terms of the supply volumes as of this year, the load factor stands as low as 55 per cent in the westbound cargo traffic.

If the ships of those independent lines which have not joined the TSA are included, the ship supply volume will increase further whereas the load factor will sag further.

There are already plans to commission newly built vessels on the TransPacific route.

Accordingly, the combined shipping space of all the carriers engaged in the TransPacific trade is expected to reach 5.3 million TEUs at the beginning of next year.

However, the cargo volume can be expected to increase to some extent owing to a number of favourable factors.

Mr Temporin expected cargo flows from Southeast Asia to North America to increase, while expectations were high on United States-Vietnam trade in the wake of the lifting of US economic sanctions.

Also, vessels serving the east coast of North America via Panama are hauling growing quantities of cargo bound for Latin America with trans-shipment on the east coast.

Nevertheless, he said the overall cargo volume seemed unlikely to increase to the extent of eliminating the over-tonnage. Therefore, it would be difficult to increase freight rates.

The reason the TransAtlantic Agreement has turned out to be effective is that a slot-sharing arrangement has been implemented.

This is a major difference from the TSA for the TransPacific trade.

The TransPacific Westbound Rate Agreement, at a meeting held in Seattle recently, decided to implement a rate restoration of US$80 per 20-foot container and $100 per 40-foot container in the westbound trade with effect from September 1.

It also decided to increase the rate for wastepaper bound for South Korea, Taiwan and Indonesia by $5 per tonne from July 15.

This decision deserved high praise, he said. ''Since the over-tonnage will persist, we will continue to carefully watch the situation.''