TRANSPACIFIC CARRIERS MAY RESUME CAPACITY MANAGEMENT

TRANSPACIFIC CARRIERS MAY RESUME CAPACITY MANAGEMENT    Facing a downturn in transpacific cargo volumes and a growing surplus of ship capacity, transpacific carriers are considering reintroducing a program of capacity management.
   Senior executives of the Transpacific Stabilization Agreement, a group of 13 of the largest Pacific shipping lines, will meet in Shanghai on Sept. 19 to discuss common issues. One of the items on the agenda is believed to be capacity management.
   A TSA spokesman said that it is “speculative” to say that the carriers will manage capacity jointly at this stage, but said that he could not comment further on the issues to be addressed at the meeting in China.
   Control of ship capacity is seen as a sensitive issue in the maritime industry by carriers and particularly by shippers.
   TSA had a long-running program of capacity management in the transpacific trade from 1989 to 1995 that allowed shipping lines to limit their utilized capacity both collectively and individually. The capacity limit scheme was canceled in 1995.
   TSA carriers sought to reinstate a capacity management program in 1996, but dropped the plan after facing criticisms from the Federal Maritime Commission.
   Harold Creel, chairman of the FMC, warned that any capacity management program would have to be vetted by his agency to ensure that carriers would still provide sufficient capacity to shippers.
   “First of all, I’d want to see the package they’re going to send to us,” Creel told American Shipper. The key questions for the agency will be how much capacity would be withdrawn under the proposed agreement, when, for how long and whether shippers would continue to have enough ship capacity for their cargoes, he stressed.
      Creel said that it is premature to say now how the FMC will rule on a new capacity management program.
   He confirmed that the agency has had reservations about capacity management by carriers in the past, but said that the FMC authorized a short-term slack-season capacity management plan by the Trans-Atlantic Conference Agreement last winter.