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The Honolulu Advertiser
Posted on: Thursday, September 26, 2002

Rise in rates likely for Asian shippers

By Tan Hwee Ann
Bloomberg News Service

SINGAPORE — Nippon Yusen K.K. and other shipping lines will probably be able to increase container freight and chartering rates next year because fewer new vessels will be delivered, analysts said.

"We do see some respite in the level of new delivery and I think we are slightly optimistic that we will see an increase in rates," said Nigel Gardiner, Managing Director of Drewry Shipping Consultants Ltd.

Higher rates will help shipping lines such as Singapore's Neptune Orient Lines Ltd. stem losses. Liner operators are planning to raise freight rates for Asia-U.S. and Asia-Europe routes next year, after overcapacity hurt attempts this year.

Container rates may grow by as much as 3.3 percent in 2003, compared with an estimated 11.4 percent decline this year, Charles de Trenck, an analyst at Salomon Smith Barney, said in a presentation at a Singapore shipping conference.

Capacity growth is expected to slow to 7.4 percent next year, compared with the 12.5 percent gain this year, de Trenck said.

Gardiner said time charter rates for ships are likely to post "moderate" gains of 7 percent to 10 percent next year.

Shipping lines have been reporting continued cargo demand growth and full vessels. Trans-Pacific cargo demand grew 17.5 percent to the equivalent of 1.9 million 40-foot containers in the first half of 2002, compared with a year ago, a shipping group said earlier this month.

The cargo gains are strengthening shipping lines' bargaining power with customers, said Jesper Praestensgaard, Asia region senior vice president of Maersk Singapore Pte., a unit of A.P. Moeller Group, the world's largest shipping company.

"Ships are full, so there's a great deal of resolve," Praestensgaard said.

"Shipping lines can't keep losing money."

The Transpacific Stabilization Agreement, which represents 14 shipping lines accounting for 90 percent of trade on Asia-U.S. routes, earlier said the group may lose as much as $2 billion on services this year.

The shipping group includes Japan's three largest lines, South Korea's Hyundai Merchant Marine Co. and Taiwan's Evergreen Marine Corp.