NVO Pacific contracts still not closed

NVO Pacific contracts still not closed    Many non-vessel-operating common carriers are still negotiating with transpacific carriers their new service contracts for the 2004-2005 season, started May 1.
   Barbara Carpe, president of Carpe Air & Sea Shipping Inc., based in Englewood Cliffs, N.J., said her company has signed only a few service contracts with ocean carriers, while the majority of transpacific contracts are still under negotiation.
   “Many of the NVOs’ contracts have not been finalized,” she told American Shipper.
   She said this year’s late negotiations are unique. Contract negotiations are often concluded “right under the wire,” but are usually done by May 1, Carpe said. By contrast, this year, negotiations are still pending in early May.
   Carrier sources confirmed that transpacific service contract negotiations took longer than last year.
   “Last year, negotiations were difficult because it was such a huge increase” in rates. said Jon Monroe, a consultant who negotiates contracts on behalf of shippers. “This year, it’s difficult because the carriers have taken a different approach.”
   Ocean carriers have aimed to implement larger rate increases for shippers and intermediaries that paid lower rates last season, according to Monroe. The rate increases, reported to be $100 to $150 per 40-foot container on average, “depended on the starting point of rates last year,” he added.
   The benchmark Hong Kong-to-Los Angeles ocean freight rate per 40-foot container averages about $2,200-2,300 under the new contracts, according to industry sources.
   Transpacific carriers have raised rates for two consecutive years and earned solid profits on their transpacific operations.
   In general, NVOs have faced higher rate increases this year than beneficial cargo owners, with exceptions, Monroe said. However, according to shipper sources, some large direct shippers have signed contracts with carriers with no rate increase for the new season.