TSA lines say industry should brace for up to $400 hike in inland costs

TSA lines say industry should brace for up to $400 hike in inland costs    Member lines in the Transpacific Stabilization Agreement said Friday they expect rising inland rail and trucking charges, cargo and equipment imbalances and the network effects of inland infrastructure to add at least $150 per 40-foot container to their costs for port-to-port West Coast service; $350 per FEU for intermodal mini-landbridge and inland point intermodal shipments; and $400 per FEU for East Coast all-water service, including reverse inland point intermodal moves.
   Those costs represent a minimum which lines say they intend to recover from customers in upcoming 2006-2007 contract negotiations, and do not include fuel, terminal handling, Panama Canal transit, documentation or other costs already addressed by separate charges.
   TSA has estimated that inland transport costs alone will increase 25 percent or more in 2006, as railroads add locomotives and crews and upgrade their infrastructure, and as truckers upgrade their vehicles and try to attract more drivers back to the industry. Equipment repositioning costs are expected to rise 11 percent, due to increased volumes, tighter port and rail free-time/detention rules, and periodic rail embargoes of empty containers.
   As worldwide vessel charter rates ease, many transpacific carriers still pay premium rates under long-term charters negotiated during a crisis environment in 2003-2004.
   Carriers anticipate continued strong traffic growth in 2006, while the capacity of new, larger ships deployed next year will be offset by network capacity constraints due to ongoing inland transport and infrastructure difficulties.
   'Carriers are adjusting their operations to manage a structural shift in global trade,' said TSA executive director Albert A. Pierce in a statement. 'A very large share of oceanborne trade is now between the world's largest manufacturer, China, and the world's largest consumer market, the U.S. There will always be ebbs and flows, but this shift reflects long-term investment that isn't going away anytime soon.'
   Container lines have responded quickly to the change over two years, Pierce maintains, adding larger ships, new China services and expanded Asian feeder networks, while diversifying port gateways and expanding Panama Canal service in response to West Coast congestion.
   Pierce said that current market conditions with respect to demand, capacity constraints and costs are unlikely to change for at least the next one or two years.
   'The feeling among ocean carriers is that the cost issue can't wait another year to be addressed,' he said, 'especially after 2005 when they were unable to achieve full recovery and fell farther behind. The situation has become urgent.'