TSA lines to recommended minimum rates

TSA lines to recommended minimum rates    A discussion agreement of 14 transpacific container carriers said it's recommending minimum rates for members on cargo moving from Asia to the U.S., beginning July 1.
   The Transpacific Stabilization Agreement recommended floor rates for 40-foot containers of $1,350 for boxes bound for West Coast ports and $2,500 for boxes to East Coast ports on all-water services. Rates for high-cube containers would be $100 higher and other size equipment have proportional minimums. The group has also come up with recommendations for inland and mini-landbridge moves.
   “Establishing a floor on rates, in light of the recent flurry of reductions, will likely decide whether some lines continue to operate in the trade,” the TSA said Thursday.

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   The recommendations are voluntary and non-binding. TSA is also recommending that:
   ' Spot rates initially set to expire June    30 will instead expire on 30 days notice from the earliest day possible, and no later than May 15.
   ' 2009-2010 contracts expire by no later than April 30, 2010, so that carriers once again operate on the traditional May 1-April 30 contract year in the transpacific.
   ' Contracts are subject to full, floating bunker charges following a revised TSA formula.
   'Recent developments in the Asia/U.S. freight market are truly disappointing,' said Brian M. Conrad, TSA executive administrator. 'The unnecessary panic mentality that set in during the winter months will cost this industry heavily, if the rates we have been seeing continue to slide and are locked in over a period of months in new contracts.'
   TSA said despite earlier recommendations, “efforts to curtail rate volatility during the traditional off-peak period have been largely unsuccessful, as carriers have struggled to respond to substantially lower cargo demand and the resulting overcapacity.
   “Senior executives with TSA carriers now must come to terms with a stark set of choices: Set their pricing at minimally sustainable levels, or see massive losses in 2009-10 that will not only threaten their viability but also damage the service integrity in the trade.”
   The group citied a forecast from Drewry Shipping Consultants that the liner industry worldwide stands to lose $68 billion in the coming year if current rate trends are not reversed.
   “It is certainly not in the interest of the shipping community broadly to have significant failures impact a major market like the transpacific,” the agreement said.
   TSA members are APL, China Shipping Container Lines, CMA CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping Co., Hapag-Lloyd, Hyundai Merchant Marine, 'K' Line, Mediterranean Shipping Co., NYK Line, OOCL, Yangming Marine Transport Corp., and Zim Integrated Shipping Services. ' Chris Dupin