TSA looks for rate increases in spring

TSA looks for rate increases in spring    Member liner carriers in the Transpacific Stabilization Agreement said Friday they would seek increases of $200 to $400 per TEU for eastbound container shipments to the United States in spring contract negotiations.
   The increases, which are recommended and not binding, are $200 per TEU to U.S. West Coast ports and $300 per TEU to all other U.S. destinations. The lines said they will also be seeking 'full recovery of costs for other equipment sizes, and improved collection of floating bunker and inland fuel charges as well as Panama Canal, Alameda Corridor and other fixed accessorial charges.'
   TSA members will also go after a $200 per TEU peak season surcharge on shipments from June 15 through Nov. 30 next year, 'with those dates subject to adjustment based on changing market conditions.'
   The announcement comes after a year in which the liner carrier industry successfully dragged rates on the transpacific back to sustainable levels after hemorrhaging losses in 2009. However, the TSA, a discussion agreement representing 15 eastbound transpacific carriers, said an early end to peak season this year has shifted the focus to restoring rate levels still higher in 2011.
   'After two quarters of healthy revenues, an early end to the transpacific peak season has left (the transpacific lane) lagging relative to other Asia container markets, while operating costs continue to rise,' the TSA said in a statement.
   The voluntary guideline contract program, as TSA calls it, is intended to 'provide more sustained economic stability and support further investment in transpacific services.'
   TSA carriers pointed out that the supply/demand situation on the transpacific settled somewhat during 2010, with Asia-to-U.S. cargo growth for the year projected at a better-than-expected 12 percent, while transpacific capacity has grown nearly 19 percent since November 2009.

Kim

   'The transpacific market is clearly returning to some kind of 'normality,' with the U.S. and Asian economies still closely linked and imports from Asia still vital to U.S. consumers and businesses,' TSA Chairman and Hanjin Shipping Chief Executive Officer Y.M. Kim said in a statement. 'Maintaining a stable infrastructure for the movement of goods is no less important today than in past years, and that will take sustained levels of carrier investment over time.'
   Kim pointed out that while carriers have prospered in 2010, they are still in precarious positions.
   'Carriers have experienced solid revenue growth across their entire networks in 2010, but two strong quarters in the transpacific — a highly competitive freight market with very thin margins — still do not fully offset two years of heavy losses,' Kim said. 'We said last year that we would not seek to recover all our losses in one year.'

Conrad

   TSA Executive Administrator Brian Conrad, meanwhile, noted that a number of operating costs have continued to rise steadily, including labor, container handling, inland transport, and the purchase and leasing of containers during a global equipment shortage. Appreciation of some Asian currencies has effectively increased local currency costs relative to U.S. dollar-denominated freight rates. Conrad said individual lines would be discussing with customers in greater detail the background to their revenue and cost recovery objectives as contract negotiations move forward.
   The TSA issued a similar voluntary directive in fall 2009 and most lines reported they were successful in implementing needed rate increases in service contract negotiations this past spring.
   TSA members lines are APL, China Shipping, CMA CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, Maersk, Line, Mediterranean Shipping Co., NYK Container Line, OOCL, Yang Ming and Zim. ' Eric Johnson