TSA LINES PLAN RATE HIKES, PROVISIONS FOR 2003-2004 CONTRACTS
Member lines of the Transpacific Stabilization Agreement said they intend to raise base freight rates across the board and implement other provisions in their 2003-2004 tariffs and service contracts for the Asia to U.S. trade.
The 14 major Pacific carriers, following a meeting in Washington last week, said they intend to raise base freight rates by $700 per forty-foot equivalent unit for all-water service to the U.S. West and East coasts, and by $900 for all intermodal inland point and cross-country minilandbridge shipments. The increases will take effect upon expiration of current contracts or May 1, which ever is sooner. There will also be proportionate increases for other equipment sizes and cargo otherwise rated.
TSA carriers also intend to include these provisions in upcoming contracts:
* Contracts will be subject to tariff terminal handling charges, quarterly adjusted fuel surcharges and other applicable accessorial charges.
* A peak-season surcharge of $300 per FEU will be applied from June 15 through Oct. 31, 2003.
* Free time allowances will be limited to those provided for in standard tariff provisions.
* New contracts will contain language allowing for future implementation of surcharges to cover government port/maritime security costs, as they arise.
Carriers of the discussion agreement also plan to extend their current $300-per-FEU peak-season surcharge for the current season through Nov. 30, due to a continued strong market will full ships.
Transpacific volumes rose 17.5 percent in the first half of 2002 to nearly 1.9 million FEUs. July's year-on-year cargo volume is up 24 percent, the TSA said.
Besides replenishing inventories, continued strong consumer spending, low interest rates and the strong dollar, the carriers said the trade has foremost been impacted by transforming of Asia 'into the primary manufacturing source for the U.S. and much of Europe,' TSA said.
The transpacific freight market is now the world's largest trade lane, accounting for about 16 percent of global container trade, Drewry Shipping Consultants said. About 60 percent of the trade moving from Asia to the United States is from China, including Hong Kong.
The growing volume of manufacturing and retail supply chain shipments from contract factories and joint venture plants in Asia 'rely more heavily on end-to-end, time-definite transportation and logistics services, requiring real-time shipment visibility on the Internet and complex consolidation and distribution issues,' the TSA said.
'Carriers have been struggling to provide the full range of transportation and logistics services customers expect in a highly competitive environment,' said Albert A. Pierce, TSA's executive director. 'They've increased service levels and lowered rates, hoping to make up the difference in managing and bringing down costs. Despite major progress in cost control, failure to restore rates in 2002 will likely result in transpacific carrier losses of some $2 billion this year. Carriers are simply not being adequately compensated for the service provided.'
Pierce added that several smaller carriers including lines that entered the transpacific trade after rates increased in 1999, have since scaled back or canceled services.
Carriers anticipate a strong Asia-to-U.S. transpacific market next year, with at last 8 to 9 percent growth overall and 14 percent out of China.