CTSA plans steep rate hikes to account for fuel, currency costs

CTSA plans steep rate hikes to account for fuel, currency costs Member carriers in the Canada Transpacific Stabilization Agreement released their 2008 rate program Friday, saying that rising operating costs and the decline of the U.S. dollar must factor into rate negotiations in the upcoming year.
   'As inland transport, cargo handling, equipment and other operating costs continue to rise, those local currency costs accelerate further against U.S.-dollar-denominated freight rates,' the discussion group of 11 carriers said in a statement. CTSA has 'adopted a 2008 rate program that addresses both of these challenges, as well as soaring world fuel prices, the leading operating cost component for ocean carriers.'
   Starting May 1 CTSA lines say they intend to raise West Coast rates by $400 per FEU, and inland point and East Coast rates by $600 per FEU. A $400-per-FEU peak season surcharge will be in effect from June 1 through Oct. 31.
   CTSA member lines have also adopted a voluntary guideline 12 percent currency adjustment factor, effective Jan. 1, from all Asia origins except Japan, where it will take effect Feb. 1.
   'The currency surcharge is intended to address rising local currency operating costs, given the recent sharp appreciation of the Canadian dollar relative to the U.S. dollar in which freight rates are assessed,' CTSA said. 'An internal survey conducted by CTSA revealed that in the period from January to November 2007, the exchange rate shift from 1.16 Canadian dollars to 0.93 in relation to the U.S. dollar has had a significant impact on carrier costs. This weighted average reflects the ratio of West Coast to East Coast cargo, and costs related to empty equipment positioning.'
   The carriers also said that rates as adjusted 'will in turn be subject to full, floating bunker fuel surcharges, assessed separately from base freight rates in cases where surcharges have been capped, mitigated or folded into all-in rates. Where current contractual commitments have been met, carriers will seek an immediate adjustment in the contract to bring bunker recovery to a full floating basis. Some carriers may seek to accomplish this through application of a separate extraordinary bunker charge. Where contractual commitments are ongoing, carriers intend to contact customers who do not have the full floating bunker provision in their contracts to seek mutual agreement to increase the level of BAF recovery now, to a full floating basis.'
   All scheduled actions will be subject to advance filing, consultation and other regulatory requirements in each of the markets served by CTSA carriers.
   CTSA also said Friday that beginning Jan. 1, fuel surcharges will become $755 per TEU, $950 per FEU, $1,065 per 40-foot high-cube container, $1,220 per 45-foot container, and $21 per weight/measure.