TSA plans April rate increase

   The 15 container shipping lines in the Transpacific Stabilization Agreement said Wednesday that they have agreed to a general rate increase on April 15 of $300 per 40-foot container in an effort to mitigate rate erosion seen in February and early March. The carriers had previously said they planned a GRI of an undetermined amount on May 1, but decided to bring the GRI forward.
   It will apply to all commodities and origin/destination pairs and follows similar recommended increases implemented on Jan. 15 and March 15.
   TSA Executive Administrator Brian Conrad said the series of increases represents a necessary step in correcting a slide in rates that misrepresents actual conditions in the Asia-U.S. freight market.
   “The downward rate pressures we are seeing do not reflect the steadily improving cargo picture eastbound from Asia,” Conrad said. “The Lunar New Year period was strong, with average vessel utilization numbers in the 95 percent range; while most people tend to focus only on the supply/demand imbalance, what is getting lost in the pricing discussion is service value.”
   Conrad compared the rate situation in the transpacific to decisions by governments worldwide to defer needed infrastructure investment.
   “We are in effect negotiating the annual operating budget for a major piece of global transportation infrastructure that happens to be privately financed,” he argued. “Competitive pressures to match the lowest short-term rate levels and lock them into 12-month service contracts across the board amounts to a significant deferred investment in the trade. Eventually, we will have to stop pricing based solely on supply demand and pay more attention to long-term service reliability and flexibility — hopefully before a crisis makes the problems more acute and the solutions far more costly.”
   The TSA members are APL, China Shipping, CMA CGM, COSCO, Evergreen, Hanjin, Hapag-Lloyd, Hyundai, “K” Line, Maersk, MSC, NYK, OOCL, Yang Ming and Zim.