TSA: Container rates to rise for U.S. exports

Current rates only make a “nominal contribution” to a round-trip transpacific sailing, and “barely compete for space aboard ships with empty repositioned containers needed in Asia,” according to the Transpacific Stabilization Agreement.    Container shipping companies plan to increase rates this fall for exports from the U.S. to Asia, according to an announcement from the “Westbound” section of the Transpacific Stabilization Agreement (TSA).
   “Effective October 1, TSA Westbound carriers member carriers in the Transpacific Stabilization Agreement (TSA)’s Westbound section will be seeking to establish new target rates in all dry commodity segments that translate into modest increases in most cases, with higher proportionate increases for the most depressed rates. TSA-Westbound lines say they expect to follow with similar, gradual increases in November and December,” TSA said.
   The statement announcing the plan gave no specific guidance on the amount of the planned increase. Spokesman Niels Erich explained, “It’s standard practice for us not to show all of the different minimum rates for different commodities, different locations etc. First, it’s unwieldy and potentially confusing, but it can also box in lines planning higher rates so that minimums are quickly treated as ceilings by the trade. The guidelines are mainly a response to average moving rate levels across major commodity segments and routes and aren’t directed at specific types of rates.”
   “Asia freight rates have fallen to historically low levels since the beginning of 2015 due to a strong dollar and unusually weak emerging market demand,” said Brian Conrad, the executive administrator for the TSA, which counts 15 of the leading container liner companies as members.
   “Current westbound rate levels in many cases do not fully cover costs,” he added. “At best, they make only a nominal contribution to a round-trip sailing, and barely compete for space aboard ships with empty repositioned containers needed in Asia. Worse, at a time when westbound equipment is already in short supply, depressed rates encourage migration of containers to other trades.”
   “The scheduled action reflects the trade’s recovery from congestion challenges earlier in the year; a strengthening market heading into what is typically the trade’s peak season; and an urgent need to halt damaging rate erosion,” the discussion agreement said. 
   TSA members include APL, China Shipping, CMA CGM, COSCO, Evergreen, Hanjin, Hapag-Lloyd, Hyundai, “K” Line, Maersk, MSC, NYK, OOCL, Yang Ming, and ZIM.