TSA dismisses overcapacity fears, seeks rate hikes to cover costs

TSA dismisses overcapacity fears, seeks rate hikes to cover costs    Lines in the Transpacific Stabilization Agreement said today they will seek rate increases in the forthcoming round of contract discussions “in light of forecasts for continued steep rises in operating costs.”
   The TSA carriers recommended across-the-board freight rate increases of:
   * $300 per FEU for cargo moving to West Coast ports and within “Group 4” West Coast states.
   * $650 per FEU for inland point and mini-landbridge intermodal shipments.
   * $500 per FEU for cargo moving all-water via the Panama or Suez canals to U.S. East Coast and Gulf Coast destinations, as well as reverse inland point intermodal moves via those coasts.
   The planned increases are intended to take effect as 2007-2008 contracts take effect, but in no case later than May 1, 2007.
   Lines also plan to implement a minimum $400-per-FEU peak season surcharge for the period of June 15 through Oct. 15, 2007.
   Albert A. Pierce, TSA’s executive director, said predictions of overcapacity were unfounded. “New, larger ships are a fact of life, but they replace ships that are redeployed to other trades,” he said. “Most U.S. ports can’t handle them fully loaded due to channel draft, terminal or rail constraints. Vessel loading is limited by a mix of equipment sizes, stability considerations and other factors. We don’t see a capacity gap of more than 2 to 3 percent, and we view that as healthy.”
   In a related development, the TSA has also extended its current peak season surcharge through Feb. 28, “reflecting near-full ships forecast through the remainder of 2006 and a widening cargo and equipment imbalance in the transpacific.” It also recommends adjusting the surcharge to a uniform $400 per FEU for all U.S. coasts effective Dec. 1.
   TSA members are: American President Lines, “K” Line, COSCO Container Lines, NYK Line, Evergreen Marine, OOCL, Hanjin Shipping, Hapag-Lloyd, MOL, Yang Ming and Hyundai Merchant Marine.