TRANSPACIFIC CARRIERS WILL INCREASE FREIGHT RATES NEXT MAY

TRANSPACIFIC CARRIERS WILL INCREASE FREIGHT RATES NEXT MAY    Shipping lines of the Transpacific Stabilization Agreement plan to increase eastbound transpacific freight rates for the next shipping season, effective May 1, and introduce a new chassis charge.
   The TSA said its voluntary, non-binding rate increase recommendations for tariff and service contract rates for the coming May 2001-April 2002 contract period will include:
   * A $525 increase per 40-foot container from Asia to U.S. West Coast ports.
   * A $600-per-FEU increase for shipments to points throughout the U.S. West Coast states of California, Oregon and Washington.
   * A $600-per-FEU increase to U.S. East Coast ports via all-water or mini-landbridge service.
   * A $750-per-FEU increase for containers moved inland intermodally via West Coast or East Coast ports.
   Shipping lines of the agreement “indicated that the recommended increases are intended to offset anticipated rising costs in several areas,” a spokesman for the carrier group said. Vessel charter rates are expected to increase in most cases by 25 to 35 percent during 2000, and by a similar amount in 2001, in a trade where nearly one-third of the ships deployed have been chartered. In addition, the equipment imbalance eastbound vs. westbound “remains at more than 2-to-1 and has increased in the first half of 2000 over the first half 1999, adding to repositioning costs,” he added.
   Other cost increases faced by shipping lines concern longhaul trucking, transloading, intermodal rail transportation and port longshore labor expenses, the carrier group said.
   As has been the case in 2000, TSA carriers have also adopted a guideline recommending a $300-per-FEU “peak season surcharge” from July 1 through Oct. 31, 2001, applied to all eastbound cargo.
   Last May, TSA carriers tried to increase ocean rates by $400 per FEU, but they were largely unable to get the increase because of greater competition from new entrants.
   The transpacific carriers have adopted a guideline to recover a portion of the cost of providing a chassis to shippers, through a new chassis charge, to become effective Jan. 1 for all tariff cargo and May 1 for all service contract cargo.
   The carriers have not yet determined the level of the chassis charge. The TSA is believed to be the first carrier agreement to introduce a chassis charge in the United States. The charge would not apply if the shipper provides its own chassis, suitable for use with the relevant shipment and terminal, the carrier group said.
   The TSA has also adopted guidelines concerning bunker charges, including:
   * A revision of the current charge calculation formula “to more quickly and adequately recover true costs associated with fuel price fluctuations.”
   * Adoption of a uniform formula for all Asian origin locations, including Japan.
   * A closing of the current gap that exists between charges and actual fuel-related costs between now and May 1.
   “The U.S. economy continues to absorb record imports from Asia and unprecedented volumes of container cargo arriving at U.S. ports shows no sign of letting up,” the carrier group said. “With cargo growth in excess of 10 percent expected in the Asia-to-U.S. market in 2001, shipping lines are focusing their attention on the rising costs of continuing to provide service in a still booming market.”
   The TSA carriers are APL, CMA CGM, COSCO Container Lines, Evergreen, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, Maersk Sealand, Mitsui O.S.K. Lines, P&O Nedlloyd, NYK Line, Orient Overseas Container Line and Yangming Marine Transport.
   The TSA is a discussion agreement that has the authority to discuss and recommend rate increases. The increased may then be implemented individually, and on a voluntary basis, by each carrier.