Mitsui O.S.K. Lines Ltd and other Asian shipping lines said efforts to secure freight rate increases of as much as 20 percent on trans-Pacific routes may be stymied by companies adding too many new ships.
A group of 14 major shipping lines that meet every year to set price guidelines had hoped to restore rates to year-ago levels. That increase for routes between Asia and North America, which account for a sixth of global container traffic, now looks unlikely.
"There may be some rates increase, but I don't think we can make the [full] restoration," said Osamu Suzuki, general manager of the liner division of Mitsui O.S.K. Lines Ltd, Japan's No. 2 shipping line. "It was not as successful as we intended [because of] the supply and demand situation."
US first-quarter economic growth of 5.8 percent and the resulting import spurt helped fill many vessels to capacity. That may not last long, though, because analysts expect shipping lines to increase their capacity by as much as 12 percent this year, double the rise in container traffic, as they take delivery of vessels ordered before last year's US-led slump in trade growth.
"Capacity utilization has been high," because liners have switched routes and sent some ships in for repair, said Masya Spek, an analyst at G.K. Goh Research Pte. "The critical question comes when the liners add the extra capacity."
The 14 carriers in the Transpacific Stabilization Agreement include Japan's three largest lines, South Korea's Hyundai Merchant Marine Co and Taiwan's Evergreen Marine Corp (
In addition to the overall increase in freight rates, the member companies are seeking to impose a peak-season surcharge of US$300 per forty-foot equivalent unit, or FEU, as the large container size is known, between June and September, said Niels Erich, a spokesman for the agreement.
Many carriers say the higher charges are warranted as they struggle to find enough capacity for their busiest routes.
In March and most of April, Mitsui O.S.K. filled between 10 percent and 15 percent more of its capacity on European and American routes than in the same period last year.
Japan's Kawasaki Kisen Kaisha Ltd, the country's third-biggest line, also posted a 10 percent gain on its outbound trans-Pacific routes in the last two months.
Evergreen Marine's ships plying trans-Pacific and Asia-Europe routes were about 90 percent full for the same period, better than last year, the company said, without providing a comparative figure. Rival Wan Hai Ltd said its ships on Asia-Europe routes were 91 percent full, compared with 85 percent a year ago.
Shipping lines also worry that the US recovery may falter before other countries' economies revive.
"We are not yet convinced that the cargo pickup will continue," said Yoshikazu Minagawa of Kawasaki Kisen Kaisha. "The stock in the US has reached a low level, so it has been restocked, but I'm not sure it will continue from there."
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