WTSA ADOPTS REEFER MANAGEMENT PLAN
Member container lines of the Westbound Transpacific Stabilization Agreement have implemented a one-year refrigerated trade management program to stabilize its refrigerated container trade.
WTSA noted that the overall westbound Pacific cargo market has shrunk nearly 7 percent during the past year, to about 31,000 TEUs, and that refrigerated freight rates have fallen 15 percent from already depressed levels.
The refrigerated trade management plan:
* Designates a market share percentage for each WTSA carrier based on historic liftings.
* Allows a 0.5-percent market share cushion to each carrier to meet unexpected customer needs.
* Provides that carriers exceeding their allocations with pay compensation to carriers unable to meet their assigned shares.
The program covers all refrigerated shipments in the WTSA trade except Indian Subcontinent, Alaska and military cargo. The plan will be reviewed on a quarterly basis and applicable charges will be paid at the end of the one-year period.
“For much of the refrigerated segment, huge dollar amounts are at stake per container and there is really zero tolerance for error or for cutting corners on service or costs” said Albert Pierce, WTSA executive director. “Competition and low rates have helped U.S. perishables exporters open new markets and compete with low-cost third-country producers, but rates have now reached unsustainable levels. We want to ensure confidence in the lines' ability to met future service commitments.”
While a booming eastbound market and equipment demand from Asia to the United States has provided a cushion for carriers to support he westbound service, those eastbound volumes have are now flat and rates have fallen sharply, Pierce added.
WTSA member lines are APL Ltd., COSCO Container Lines, Evergreen Marine Corp., Hanjin Shipping, Hapag-Lloyd Container Line, Hyundai Merchant Marine, “K” Line, Maersk Sealand, Mitsui O.S.K. Lines, N.Y.K. Line, OOCL, P&O Nedlloyd and Yangming Marine Transport.