New World Alliance cutting capacity due to higher fuel costs

November 21, 2007 by SwizStick  
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Via Logistics Today:

APL, Hyundai Merchant Marine, and Mitsui OSK Lines, all members of The New World Alliance (TWNA), jointly announced that in the face of an unprecedented rise in operating costs, the carriers would withdraw more capacity than in previous years and do it sooner than in the past. The immediate winter reduction in Transpacific capacity will be around 10%, and this will be followed by a further reduction of 5% to 10% of its joint capacity from early December. The withdrawal may also run longer than in past years, said TWNA.

The current Weighted Average Fuel Price is 519.12 per ton, a nearly 27% increase from a month ago, when it was 410.02, which is already a huge increase from the beginning of the year. The TWNA claims they have sufficient capacity to handle current volumes, and so far my company hasn’t seen any disruptions (we use one of the carriers in the TWNA). It will be interesting to see if the carriers have enough clout to stick their key customers with a floating BAF next year or if their key customers will get away with a fixed BAF again.

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ATA (American Trucking Association) will support higher fuel taxes