Hong Kong shippers dismiss second rate hike warning
The Hong Kong Shippers’ Council has dismissed a warning issued Monday by the Transpacific Stabilization Agreement carrier group that it may raise rates or surcharges a second time this year as a mere “routine” attempt to talk up rates as the new round of transpacific service contract negotiations starts.
“I would not take that seriously,” said Sunny Ho, executive director of the Hong Kong Shippers’ Council. “They’re doing that every year.”
Ho said TSA carriers try to justify rate increases, but market prices ultimately depend on supply and demand. All indicators point to a downturn or a “mild growth” in U.S. consumer spending this year, according to Ho.
He noted 2004 was a very good year for transpacific carriers, who have reported record profits.
This year, though, transpacific cargo growth should be slower and a large number of containerships are expected to join the market.
The TSA and its carriers have predicted the eastbound Asia-to-U.S. trade will expand 10-12 percent this year, after growing nearly 15 percent in 2004.
TSA said in November its carriers recommend May 1 rate increases of $285 per 40-foot container for Asia-to-U.S. West Coast shipments and $430 per 40-footer for all-water shipments to the U.S. East Coast and Gulf ports. It added on Monday that further increases or surcharges this year may be necessary to pass on cost increases from ports, railroads and other subcontractors.
“Shipping lines have appeared to be very optimistic, but there are a lot of uncertainties,” Ho said. Ho cited weaker U.S. consumer spending, the country’s record trade deficit, the weak U.S. dollar and high oil prices.
Following Maersk Sealand’s withdrawal from the TSA, the market share of the transpacific carrier group has dropped below 50 percent, according to the Hong Kong Shippers’ Council.
In a separate development, the Hong Kong Shippers’ Council has denounced attempts by ocean carriers to pass on to shippers costs due to port congestion.
“Carriers are claiming additional costs have been incurred and they want to be compensated with a congestion charge,” Willy Lin, chairman of the shippers’ council, wrote in the latest issue of “Shippers’ Today.” But while the council recognizes that there are extra costs for carriers, it believes port and container terminals are “basically the carriers’ own contractors.”
“It is the carriers’ responsibility, therefore, to see to it that their contractors are giving them — and they are getting in return — efficient and good quality of services,” he insisted.
The issues of U.S. West Coast port delays, alternative port routing and equipment demurrage costs are expected to dominate the current round of transpacific service contract negotiations.