The document summarizes key points from the TPM 2013 conference. It discusses Maersk's new Triple E ships, the challenge of absorbing increasing container ship capacity, using the Suez Canal more for East Coast services, challenges with fully automating terminals, changes in the chassis business, the potential impacts of US budget sequestration, Mexico emerging as a trade powerhouse, and tighter environmental regulations increasing bunker fuel costs.

1. Eight Things We Learned at TPM 2013

2. Maersk’s Triple Es
Maersk Line will take delivery of the first five of its 18,000-TEU Triple E ships in the
second half of this year, Skou said in his keynote address. He said the delivery of
90,000 TEUs of new capacity would have little or no impact on the total fleet
capacity this year, even though they’ll be deployed on the Asia-Europe trade. “They
will hardly make it onto the market this year and won’t add any meaningful capacity
this year,” he said. “Our capacity growth will mirror the growth in the market. So
that means we will have to take other tonnage out.”

3. Carriers’ Capacity Challenge
Container ship fleet capacity will increase by about 10 to 11 percent this year, far
more than the growth in global demand, Skou said, but carriers will be able to
absorb most of the gap between capacity and demand by scrapping, idling and
slow-steaming. For a change, analysts such as the JOC’s Mario Moreno and
Alphaliner’s Tan Jua Joo and carrier representatives such as Skou are largely in
alignment with forecasts in growth in demand of about 3 percent. Skou expects
growth on the trans-Pacific and north-south trades to help absorb capacity shifted
from the stagnant Asia-Europe trade.

4. The Suez Solution
Shipping lines “can't make any money” operating Panamax vessels on all-water
services to the East Coast, so they’ll launch more services from Asia through the
Suez Canal, according to Skou. He sees carriers settling in at 60 percent of their
East Coast services on the Panama Canal route and 40 percent on the Suez route.
That compares to 90 percent of their all-water services via the Panama Canal
today.

5. Terminal Automation: Not So Fast
SSA Marine President Ed DeNike said few terminal operators will invest in fully
automated terminals in the short term because they can’t generate enough
container volume to cover the $400 million to $600 million costs involved in fully
automating the vessel, yard and on-dock rail operations.

6. Chassis: The Final Frontier
Changes are coming thick and fast in the intermodal chassis business as the
carrier-owned share falls to 20% in 2013: Consolidated Chassis Management has
opened its carrier-owned co-op pools to truckers and other equipment suppliers.
Motor carriers have formed the North American Chassis Pool Cooperative, which is
buying ocean lines’ chassis and putting them into CCM pools. And the ports of Los
Angeles and Long Beach are setting up a “gray chassis” pool for the estimated
110,000 chassis in their areas. Shippers are watching closely. Marc Winocur,
senior manager of international transportation at Target, said cargo interests aren’t
looking for a one-size-fits-all solution, and want to make sure costs are identified.

7. Sequestration: Only the Beginning
U.S. importers will likely see cargo clearance slow later this month because federal
sequestration will reduce Customs manpower. But the delays at seaports and land
borders, along with cuts to freight-related transportation programs, could be just a
taste of the damage the sequestration will have on U.S. supply chains. That’s
because the budget cuts to CBP, the Department of Transportation and other
agencies are only part of the first wave of $85 billion worth of cuts. The total
sequestration of $1.2 trillion will span 10 years. That puts pressure on Congress to
avoid or blunt future cuts by tackling the federal deficit — a task both chambers
have failed to take on.

8. Mexico: The Next Trade Power
Walter Kemmsies was succinct in his assessment of the United States’ southern
neighbor: “Mexico is emerging as a global powerhouse,” Moffatt & Nichol’s chief
economist said. The factors: a young population in an aging world; a closing of the
wage gap with China; and consumer-driven growth. The focus on trade is good for
Mexican ports such as Lazaro Cardenas and Manzanillo. “Ocean shipping is
underused in Mexico, exacerbating the imbalance in trucking equipment in U.S.
trade,” said Troy Ryley, managing director for Mexico at third-party logistics
provider Transplace. He put that trailer imbalance at 4-to-1, making matchback on
the north-south trade virtually impossible. It’s one reason Kemmsies says ocean
shipping growth in Mexico will outpace growth in surface trade.

9. Regulation to Hike Bunker Fuel Costs
Container lines that call on U.S. and Canadian ports and the shippers they serve
need to prepare for higher costs to meet tightening environmental regulations.
Under International Maritime Organization rules, vessels have to emit less than 1
percent sulfur when they are 200 miles from U.S and Canadian coasts. The
permitted sulfur emission level falls to 0.1 percent in 2015. The need to use more
expensive and cleaner fuel, invest in scrubbing technology or do both is expected
to boost the industry's annual fuel expense by as much as $100 million, with
shippers having to bear much of the cost.

10. STAY INFORMED.
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