LONG BEACH, CA-Trans-Pacific eastbound and westbound container trade is forecasted to grow at a healthy rate of 9.1% in 2011, versus 10.4% in 2010, despite continuing economic challenges in the US and global economy. So said experts and analysts at the 11th Annual Trans-Pacific Maritime Conference held March 7 and 8 at the Long Beach Convention Center. While still eluding peak volumes of 2007, eastbound trade is expected to increase 8.2% to 13.5 million TEUs and westbound trade growth will accelerate to 11%, from 4.3% in 2010, to 6.9 million TEUs.
More than 1,700 attendees, executives, and analysts attended the event, which took place against a backdrop of the aftershocks of the 2009 and 2010 earthquake that shook container shipping and logistics to its very foundations. The morning panel pointed out that the US economy will continue to expand in 2011 as consumers increase spending by 3.2%, after growing by an estimated 2.9% in 2010.
According to Mario Moreno, Journal of Commerce economist, “Several factors contribute to the growth forecast of trans-Pacific eastbound trade, including payroll tax reductions, extension of the Bush-era tax cuts, and wages and salaries rebounding in 2010 by 3.5% after falling by 1.8% and 2.5% in 2009 and 2008 respectively.”
Retail sales will continue their upward trajectory in 2011, said panelists at the event. Auto sales, accounting for nearly 25% of total US retail sales, grew significantly last year, up 12.2% versus 2009, and subsequently, containerized imports of auto parts increased 40. Since auto sales are still running below replacement levels, Moreno expects sales will continue to increase in 2011.
And while the forecast was mostly positive, panelists pointed out that challenges do persist, which may impact forecasted growth rates. High unemployment rate, slow job creation, household liabilities and oil prices were a few examples mentioned to keep an eye on.
Keynote speaker, C.C. Tung, chairman and CEO of Orient Overseas International Ltd. pointed out that the global economy, trade and the shipping industry are inextricably linked. “It has been said that to argue with globalization is like arguing against the law of gravity,” he explained. “Globalization has been described as a free flow of info capital goods and people, and the container industry relies on all of those to be successful.”
Tung explained that if even one of the four flows of globalization dries up, all become blocked. He points to capital drying up in 2009 when the economy crashed as a key example to illustrate his point. “The result of that in the container industry was a collection loss of more than $17 billion.”
Tung pointed out that looking ahead, nurturing free flows of information is critical at both ends of the supply chain and at every stage in between. “Industry players must be able to work together,” he said. “We are not out of the woods yet and the only way we can have a clear view of the future is to increase information exchange on key issues. We must ensure that the free flow of globalization remains open.”
Panel speaker Y.M. Kim, president and CEO of Hanjin Shipping Co. Ltd., the fifth largest import carrier in the US, and chairman of the Trans-Pacific Stabilization Agreement, like other experts at the event, remained reasonably optimistic despite cost pressure. “I expect supply to be more in line with the demand situation,” he explained. “We are expecting 2011 utilization to remain fairly strong. I think the supply gap will not be as large as some might predict.
Kim said that although 2010 was a year of remarkably recover, “we still haven’t made up for the losses of 2009.” He adds that “whether the industry can sustain the momentum in 2011 is the big question.” His short answer to the question is “yes we can.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
