Asia/U.S. yearly contract rates remain flat, except to East Coast

Asia/U.S. yearly contract rates remain flat, except to East Coast    2005-2006 transpacific service contract negotiations in the past few weeks have resulted in no change or marginal increases in rates for shipments from Asia to the U.S. West Coast, while new contracts covering all-water shipments to the U.S. East Coast contain small rate rises compared to 2004-2005.
   As expected, the growing demand for U.S. East Coast all-water container services gave ocean carriers more bargaining power to secure rate increases on this route. But ocean carriers have largely failed to implement their proposed May 1 rate hike of $285 per 40-foot container for Asia-to-U.S. West Coast shipments, according to industry sources.
   “In some cases, in fact, there were decreases in rates,” said Frank Caradonna, principal at Pegasus and a former OOCL executive.
   The general rate increase “is fizzling out,” said Klaus Jepsen, president of New York-based Shipco Transport, a neutral non-vessel-operating common carrier. “Yang Ming and Evergreen have not taken any general rate increase — another carrier took $25.'
   Caradonna said typical increases in U.S. East Coast all-water rates were $200 to $300 per 40-foot container. For containers shipped by mini-landbridge to the interior, typical rate increases were $100 per box.
   Caradonna said carriers are often not collecting the peak season surcharge, or they have agreed to reduce the peak season surcharge in their contracts with shippers.
   The peak season surcharge, set at $400 per 40-foot container by Transpacific Stabilization Agreement, the group of major Asia-to-U.S. ocean carriers, was due to kick in June 15.
   The TSA had also sought a May 1 rate increase of $430 per 40-footer for all-water shipments to the U.S. East and Gulf coast ports, and a $350 per 40-footer increase in freight rates for shipments to the U.S. East Coast and Coast or inland destinations via intermodal rail and truck service.
   John van de Merwe, chief executive officer of CMA CGM (Americas), described the outcome of this year’s Pacific service contract negotiations as “a mixed bag.”
   “We have fully met our expectations as it relates to Asia to the U.S. East Coast,” van de Merwe said. For contracts covering shipments to the West Coast, he saw strength in the market from North China but weakness in the main market from South China. Overall, he said the West Coast rates this year proved “disappointing.”
   CMA CGM, like other ocean carriers, wanted higher revenues “to offset the higher cost we are experiencing,” van de Merwe said.
   Citing soaring bunker costs, he said CMA CGM has been firm in incorporating a bunker surcharge clause in its service contracts with shippers. “Mostly, we are protected,” he said.