Europe demand for goods from Asia has also perked up the trade. ComPair Data, a global ocean shipping research and information technology firm based in Jacksonville, Florida, reports that between January and April, eastbound transpacific capacity had expanded by 2% weekly. On a month-to-month basis, there was a 4% increase in capacity in April '02 compared to April '01. In the World Liner Supply report, ComPair Data also identifies wide variations between carrier groups in how they changed vessel capacity deployed in the transpacific. Some carrier quarters have added capacity in each of the last four quarters, despite the problem of over capacity, while others have withdrawn services and removed capacity.

A post-Chinese New Year surge in transpacific eastbound cargo in March had given the trade something to hope for in terms of outlook for the upcoming traditional peak season months in June to September. Shipping executives were reportedly caught off-guard by a surge in imports from Asia and carriers had to deal with 'rolled cargo' or shipments re-booked on later voyages, reported JoC Week. The sudden boom is said to be in line with the brightening US economic picture.

Thus said, transpacific carriers were aiming for a US$300 per FEU hike on May 1st, but even the lines were not that hopeful despite strong eastbound loads in February and March. By May, shippers said they had only signed up about 30 to 40% of their customers and were not ready to commit to new contracts. The going was slow and despite the shouts of "Rebound!" and restoration of capacity, there did not seem to be that much capacity to warrant the hike sought in May. Shipping lines had no choice but to put their fate into the traditional peak season of June to September and shippers are also showing some optimism with the China market's recovery.

Philip Damas, editor of America Shipper, says there has been a technical correction for the trade as, "the volume surge was largely a correction of US/European importers replenishing their inventories, although there is also an element of market growth.

"Moreover, the big increase in February/March traffic, as compared to last year, was partly distorted by the fact that Chinese New Year this year was later than last year. In March, major US ports did not repeat the 30%-plus growth in imports they had reported in February.

"When the port of Los Angeles reported February port statistics showing that loaded inbound containers soared 52% to 234,405TEU compared to Feb '01, many must have been incredulous. 52%? Does this mean the long-awaited recovery of the transpacific market?" asks Damas. "A few days later, the port of Long Beach reported a somewhat less dramatic increase in inbound cargo of 30% for February, to 202,276TEU, and the sales force of ocean carriers went to tell shippers that 'ships are filling up' and the market is recovering fast."

For carriers, says Damas, the timing of the cargo boom could not have been better as many shippers and forwarders were still negotiating service contracts with them. 'It was like putting up a sign saying 'Hurry! Last week of winter sales!' But these are only partial, early signs of possible changes in trends. The market this year is still extremely difficult to analyze from the information available."

According to Damas, it is unclear as to whether NVOCCs and smaller shippers would be able to secure shipping services and capacity under attractive terms in a busier transpacific market, particularly the spot market. However, he said the largest shippers have played their cards right and benefitted from early negotiations, when the market was leaning towards the carriers.

"The supply and demand picture has improved," said Claus Hemmingsen, managing director of Maersk Hong Kong, in early May. "Its a good sign especially since 2001 was such a challenging year." He said Maersk would be reinstating some of the capacity it had pulled out since late last year, but not all. There have been a few signs of an increase in trade these past few months, he said cautiously, although given the challenging situation last year, "things could only go better" this year, said Hemmingsen.

ComPair Data calculates that Maersk had reduced capacity by as much as 24% although Hemmingsen would not comment on the figure. He said that capacity reduction has no impact on a busy shipping hub such as Hong Kong, "where there are lots of strings on a daily basis and shippers' opportunities are not affected. Capacity reduction may have an impact on smaller, more isolated ports but those ports are also replenished by feeders." He said there definitely would be a reinstatement of capacity this year but he does not think they would be returning all that had been pulled out.

A P MÈûller, parent company of Maersk Sealand said cargo volumes and freight rates for container vessels were under pressure from the beginning of the year due to stagnant world trade and addition of tonnage. While volumes transported have been slightly higher in '01 than '00, average freight rates were considerably lower. In making its forecast for '02, the company said its calculations were based on a container rate that was lower than US$225 per FEU than in 2001. A P MÈûller forecast a minor negative result for '02.

While capacity reduction may have helped carriers in certain trade lanes to stabilise some of the weaker, dropping rates, such as in the Europe/Asia trade, where a US$200/TEU westbound freight rate on April seems to have been accepted by shippers, some lines had added. Evergreen and Lloyd Trestino saw the largest capacity increase on a yearly basis at 21%, while Cosco, K Line and Yan Ming increased their capacity by 17%.

Orient Overseas Container Line (OOCL), which held its AGM on May 3, said there had been a surge in box volumes, especially on routes from China to the US, although freight rates have remained unchanged in Q1. "There are signs of recovery. Volumes are starting to improve, but there is very little improvement in rates," Orient Overseas (International), Chief Financial Officer, Nicholas Sims said. Stanley Shen, OOCL GM Corporate Communications said container volumes rose 22.4% on routes from China to the US between January and March, compared with the same period last year. The shipping line had shipped 525,000TEU on these trades in January and February. There was also an improvement on Asia to Europe trades, but Sims said it is premature to say if the increase in liftings marks the start of a long-term recovery in box volumes. Given that volumes have risen this year without a commensurate increase in freight rates shows there is still over capacity. Despite an 11% rise in liftings, OOIL, mother company of OOCL, reported a 46% fall in profits attributable to shareholders of US$60.2mn.

The shipping lines are gradually putting back capacity in the transpacific as they see US importers stocking up for the second half. "Balance is still in favour of demand," said Eric Wong, General Manager of P&O Nedlloyd in Hong Kong. But there is no return of tonnage on the Europe route. "We're still awaiting the results of the May 1 contracts to see how the NVOCCs are doing with the $200 rate increase."

P&O Nedlloyd put into service the first of four 6,800TEU containerships, the Stuyvesant, in March 2001. She is deployed in the Grand Alliance's Europe-Far East Service. In May and June '01, the P&O Nedlloyd Shackleton and Houtman, respectively came into service. The three are in the "Whale" class with the same 6,800TEU capacity. The P&O Nedlloyd Remuera has a 4,100TEU capacity and with 1,300 power plugs for 20ft and 40ft high cube integral refrigerated containers or reefers, the ship is the largest refrigerated container ship in the world. P&O Nedlloyd said it would introduce seven of these ships into the trade over the next year. Partner operator CP Ships will add another three vessels of the same size for sailings on the Australian/New Zealand, Europe/US trade routes.

In April 02, CP Ships announced that together with its partners in the Grand Alliance, namely NYK, OOCL, P&O Nedlloyd, Hapag, had reached agreement with Cosco, K Line and Yang Ming to form the Atlantic Space Charter Agreement. The agreement meant that one weekly string of five 2000TEU ships have been withdrawn by Cosco and Yan Ming.

Whether the pick-up in loads is just a seasonal phenomenon or a sign of better months to come, there's no doubt that this year's results could only be comparatively better than last year's abysmal results. Damas of American Shipper predicts that the 30% volume growth seen in eastbound transpacific cargo in February would not be sustained for the rest of the year. "After last year's virtual stagnation of eastbound cargo volumes, the transpacific trade will indeed return to growth, but nobody can yet quantify whether growth this year will mean 5% or 10% or more."