OOCL'sZaninelli warns of container crunch
A shipping executive warned exporters to plan ahead for their equipment needs because empty containers will be increasingly difficult to secure during the coming winter and spring.
Ed Zaninelli, vice president of trans-Pacific westbound at orient Overseas Container Line, said equipment is already beginning to get tight in some locations such as the Midwest, but the real crunch will not come until the end of the year.
"Equipment generally will get tight beginning in December," Zaninelli told WESCCON, the Western Cargo Conference of freight forwarders and customs brokers in Rancho Mirage, Calif. A situation is developing today that resembles what happened in late 2009 and early 2010, although the equipment shortage probably won’t be as severe as it was two years ago.
Carriers reacted to the 2008-09 recession and a 15 percent drop in imports from Asia by cutting capacity almost 30 percent for the traditional winter slack season in the trans-Pacific. Carriers deploy capacity based on imports, which are about twice the volume of exports in the trans-Pacific.
However, the slack season for imports is the peak season for exports, which builds in the winter months and peaks in late spring. Exports to Asia surged in 2009-10, and a severe shortage of vessel space and equipment availability ensued.
The peak season in the eastbound Pacific this fall was a bust. But exports have been strong and are getting stronger. For example, the Portof Los Angeles, the nation’s largest container port, reported flat imports in September compared to September 2010, but exports were up 26 percent. Last month was the best September for exports in the past five years, Zaninelli said.
Capacity reductions have already begun based upon the disappointing import results in the trans-Pacific. Carriers in late summer began to announce their intentions to reduce capacity early this fall, and three smaller niche carriers each pulled a string of vessels.
Over the past two weeks, several carrier alliances announced that they will reduce capacity in November or December, which will cut capacity in the Pacific by an additional 9 percent, Zaninelli said. He added that further announcements of capacity cuts are likely.
When vessel capacity is reduced, the 5,000 to 8,000 20-foot equivalent container units that the vessels would normally carry leave the trade as well. The result is that exporters in certain locations such as the Midwest and the Pacific Northwest will find it difficult to secure sufficient containers unless they give their carriers as much as advance notice of their equipment requirements as possible, Zaninelli said.
The reason carriers are reducing capacity is they are losing money. "Every line will lose money this year. Some carriers will lose a lot of money," he said.
DATE:2012.3.25
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