SOUTH Korea's Busan port and its terminal facilities are experiencing heavy backlogs in US-bound boxes because of a year-long supply-and-demand dispute between shippers and shipowners
Ship owners continue to restrict the number of vessels they operate to secure higher rates and avoid a repeat of the oversupply situation seen last year, say shippers.
The ship shortage coincides with a rise in cargo volumes and has caused delays for as much as 15 per cent of the Korean port's containers, many of which are stuck on the dock for more than a week, said Busan International Container Terminal manager Park Jong Ho.
The capacity crunch, which is particularly prevalent on Asia-US routes, has even prompted an investigation by American regulatory agencies, Bloomberg News reported.
Shipowners and operators, having suffered industry-wide losses of up to US$20 billion, say there are still few signs of consumer demand recovery - not with US unemployment at 10 per cent and new building permits still in decline.
This lack of consumer demand, said Moeller-Maersk CEO Nils Smedegaard Andersen, would persist and continue to deter owners and operators from putting more ships into service.
Hong Kong's Orient Overseas Container Line boss, CC Tung echoed Mr Andersen's remarks, stating that 2009 was a bitter lesson, and operators would have to be more disciplined about managing tonnage.
Nevertheless, rates for ad hoc shipments from Asia to the US are up by as much as 50 per cent this year at $2,100 per FEU, said Johnson Leung, an analyst for shipping hedge-fund group Tufton Oceanic.
With the direction of future prices still undeterminable, long-term contract shippers, many of whom are currently in annual rate negotiations, are equally flummoxed.
According to Mr Leung, shipping lines doing business in Asia, including Maersk and Mediterranean Shipping - the world's biggest operators, are seeking a price increase of about $800 per box for trips to the US West Coast, in what would amount to an almost 50 per cent mark-up over previous rates.
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