TACA sees stronger eastbound trade, plans to raise rates

TACA sees stronger eastbound trade, plans to raise rates    Shipping lines of the Trans-Atlantic Conference Agreement on Wednesday reiterated their intention announced last October to raise eastbound and westbound freight rates in several installments this year.
   Eastbound, traditionally the weaker leg of the transatlantic trade, cargo volumes increased an estimated 10 percent in 2004, helped by the depreciation of the U.S. dollar against European currencies.
   TACA lines plan to raise eastbound tariff rates $640 per 20-foot container and $800 per 40 or 45-foot container this year, with four increases each of $160 per 20-foot container and $200 per 40 or 45-foot container effective Jan. 1, April 1, July 1 and Oct. 1.
   “Eastbound rates are beginning to improve but are nowhere near the level of remuneration needed,” said David Jeffries, general manager of the transatlantic conference.
   Eastbound rates per TEU are believed to average about $900, as compared to about $1,500 westbound.
   The dynamics of the transatlantic trade have changed following the start of the recovery of the eastbound trade. In 2004, volumes in the dominant westbound direction grew about 5 percent, more slowly than the eastbound traffic.
   Despite the stronger eastbound performance, TACA said that “a wide trade imbalance, in the region of 35 percent,” continues to characterize the market.
   Westbound, TACA carriers initially plan to raise rates $240 per 20-foot container and $300 per 40 or 45-foot container, effective April 1. They also intend to hike rates again later this year, but said the proposed increases have not been decided.
   TACA cited increased costs experienced by its member carriers, particularly for ship chartering and new containers.
   CP Ships, a non-TACA carrier group, said it plans to reduce capacity on one of its North Europe/Montreal gateway services, which also serve the U.S. market.
   “Thereafter, supply side projections relative to the remainder of 2005 suggest capacity will be stable,” TACA said.
   TACA said its members “are also concerned about the effective devaluation of the U.S. dollar and its effect on the bottom line value of earnings.” The conference reaffirmed its policy to address currency exchange rate fluctuations through a separately stated Currency Adjustment Factor (CAF), subject to monthly monitoring.
   TACA carriers are Atlantic Container Line, Hapag-Lloyd, Maersk Sealand, Mediterranean Shipping Co., NYK Line, OOCL and P&O Nedlloyd.