Transpacific carriers “achieved $100-150 rate increases” this year

Transpacific carriers “achieved $100-150 rate increases” this year

Transpacific carriers “achieved $100-150 rate increases” this year

   Transpacific container shipping lines have implemented eastbound rate increases of about $100-150 per container for the 2004-2005 shipping season, according to a senior executive of West Coast forwarder and non-vessel-operating common carrier Masterpiece International Shipping.
   The estimated price increase is less than one-third of the $450-600 rate increase per 40-foot container sought by Transpacific Stabilization Agreement (TSA) carriers in the trades from Asia to the U.S. West Coast and U.S. East Coast for contracts starting on or after May 1.
   William Wratschko, vice president of commercial operations at Masterpiece International Shipping, told American Shipper that increases of $100-150 for this year, depending on the size of the contract, were in addition to last year’s increases by ocean carriers.
   “They have the ability to raise rates,” he added. Shipments from Asia are already being “bumped” — or rolled over to the next sailings — due to capacity constraints, he explained.
   Wratschko said transpacific carriers negotiated with smaller forwarders before starting service contract negotiations with the larger intermediaries. He was involved in negotiations on behalf of his company and other members of the IFLN forwarder network.
   The forwarding executive’s comment on the limited success of transpacific carriers’ price increases this year follow critical comments on service contract negotiations made last week by Frank Caradonna, consultant with Pegasus Ltd. and a former Sea-Land Service and OOCL executive.
   Caradonna referred to “the current scramble to hold and recover whatever is possible of the failed general rate increase.” He told the Containerization International conference in London there were “reductions in rates as short-term demand slipped below expectations” after Chinese New Year, at the beginning of the year, followed by the conclusion of a number of major service contracts “with little or no increase either in rate or assessorial.” The next phase of the cycle this year was “a renewed resolve to obtain increases from mid to smaller importers,” he added.
   According to a shipper source, the average increase in eastbound rate this year has been between none and $100 per 40-foot container, despite the additional supply constraint caused by a shortage of container equipment in Asia.
   Rodolphe Saade, managing director of CMA CGM, a TSA member carrier, said last week it was too early to say what the average transpacific rate increase has been. He said service contract negotiations this year had taken longer than in the 2003-2004 annual round, and many had yet to be concluded.
   In a separate development, APL’s average revenue per 40-foot-equivalent unit, across all trade routes, amounted to $2,528 in the four-week period ended April 2. Neptune Orient Lines, the parent company of APL, said this was 11 percent higher than a year ago. APL’s average rate has reached a plateau of about $2,520 since the beginning of the year, following a sharp upwards trend in the summer and fall of 2003. However, APL’s average rate is affected by any change in the mix of cargoes and trade routes served by the company, and does not specifically reflect the level of transpacific rates.