<!DOCTYPE HTML PUBLIC "-//IETF//DTD HTML 3.2//EN">  <HTML> <HEAD> </HEAD> <BODY BGCOLOR="#FFFFCC" TEXT="#000000" LINK="#660000" ALINK="#003300" VLINK="#660000"> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="476">   <TR> <TD COLSPAN="2" ALIGN="LEFT" VALIGN="TOP" WIDTH="100%">  <a href="http://economist-02-ng.iconnet.net/click.ng;spacedesc=joc_maritime_story_full"> <img src="http://economist-02-ng.iconnet.net/image.ng;spacedesc=joc_maritime_story_full" WIDTH="468" HEIGHT="60" BORDER="0" HSPACE="0" ALT="Advertisement"></a>  <IMG SRC="../images/common/dot_banr.gif" WIDTH="468" HEIGHT="13" BORDER="0" HSPACE="0"> </TD> </TR>   <TR> <TD VALIGN="TOP" ALIGN="LEFT" WIDTH="465">  <IMG SRC="../images/br_martm.gif" ALIGN=LEFT WIDTH="220" HEIGHT="29" BORDER="0" HSPACE="0" ALT="Maritime">   Carriers see no quick fix for Asia imbalance BY BILL MONGELLUZZO JOURNAL OF COMMERCE STAFF  LOS ANGELES -- Ship lines in the largest U.S. trade lane see no immediate relief from the trade imbalance with Asia. Since imports from Asia are so much greater than exports, ships are out of space eastbound but are returning to Asia at less than 70% of capacity. The imbalance is creating equipment nightmares as carriers try to reposition empty containers in Asia. The imbalance with Asia is certainly not new, but it is especially severe this year because of the Asian economic and financial crises. In the view of ports, shipping lines and terminal operators, it is going to get worse before it gets better. Statistics tell the story. According to Brian Conrad, managing director of the Asia-North America Eastbound Rate Agreement, the rate-setting conference in the trade, imports from Asia exceeded exports by 137,000 containers in 1996. The disparity grew to 417,000 containers in 1997 and is projected to total 900,000 this year. "In 1999, it looks like it will be close to one million," Mr. Conrad said. In the first five months of 1998, containerized imports from Asia increased 19.9%, compared with the same period in 1997. "Conservatively, we see an 18% to 25% increase for all of 1998," he said. Shipping lines are starting to make plans on the assumption that the severe imbalance will be around for several years. "We see no improvement in the present situation for the next two to three years," said James C. Galligan, vice president of marketing at Mitsui O.S.K. Lines America. Eventually, the balance has to at least partially correct itself. "Over time, the strength of the U.S. economy will slow. Demand will pick up in Asia and this will force prices up," said Michael Sclar, an economic consultant in Lexington, Mass. Shipping executives, however, also feel that the trend in the trans-Pacific is for the United States to continue importing goods that move by sea. But exports will be the high-technology products that move largely by air, as well as intellectual property, entertainment and financial services exports that likewise do not fill ships. "Over the course of time, the imports that are moving on ships will increase, while sophisticated U.S. exports will increase," said Ed Kelly, chief operating officer at Cho Yang Line America. Another trend that is causing carriers to rethink their operational strategies is the strong growth in imports from Hong Kong and South China, at the expense of the emerging markets in Southeast Asia. Although countries like Indonesia, Malaysia, Thailand and the Philippines have devalued their currencies by as much as 50%, figures provided by PIERS, the Port Import/Export Reporting Service of The Journal of Commerce, show that most of the increase has not come from Southeast Asia. Rather, electronic goods, office machinery, sporting goods bicycles, furniture, toys and many consumer items have grown 200% to 400% from Hong Kong, China, Taiwan and Japan. "Southeast Asia is having trouble getting financing and buying raw materials, so manufacturing is shifting to China," said Albert Fierstine, director of business development at the Port of Los Angeles. Shipping executives do not expect this trend to be reversed any time soon. "When you look at the potential of China vs. the reality, the only thing shocking is that China hasn't grown faster," Mr. Kelly said. Yet another trend that is emerging in the U.S. trade with Asia is the growth in traffic during the so-called slack season. Normally, imports from Asia peak in October and then decline for the rest of the fourth quarter and well into the first quarter of the following year. In the last quarter of 1997 and the first quarter of 1998, however, imports from Asia increased by almost 20% compared to the same period a year earlier, Mr. Galligan said. Although imports will again drop off this winter and next spring compared to September and October, shipping executives say the overall trend will be upward. "The strength in imports will continue at least until the year 2000," said Tony Micena, assistant vice president of import sales at Solar International Shipping, the agent for Yang- ming Marine Transport Corp. The relentless growth in imports, coupled with unusually weak exports to Asia, is creating a logistical nightmare for carriers. "It puts a tremendous strain on the lines and the infrastructure," said Frank Butters, vice president of marketing and pricing at "K" Line America Inc. The shortage of empty containers in Asia has become such a problem that carriers are considering measures to speed up the logistics chain, such as reducing free time for holding on to containers, Mr. Conrad said. <CENTER> <A HREF="brief.htm">previous</A>  | &nbsp<A HREF="./">maritime home</A>  |  <A HREF="e20199.htm">next</A> </CENTER>      </TD>  <TD WIDTH="10" VALIGN="BOTTOM"><IMG SRC="../images/common/blnk_dot.gif" ALIGN="LEFT" WIDTH="10" HEIGHT="0" BORDER="0"></TD>  </TR> </TABLE> </BODY> </HTML>