Shippers seek ways to mitigate ocean carrier rate hikes
Patrick Burnson, Executive Editor -- Logistics Management, 12/17/2007
Mike Levans on this week in Logistics: Shippers seek ways to mitigate ocean carrier rate hikes, DHL to buy out remaining share of Sinotrans-Exel joint venture, STB puts NS-Watco endeavor to a halt, FMCSA retains current hours-of-service limits ; logistics; shippers; transportation trends; Truckers; Group Editorial Director Mike Levans tells us whats new in the latest issue of Logistics Management magazine. http://link.brightcove.com/services/link/bcpid1348280054http://www.brightcove.com/channel.jsp?channel=1244057710
EVERETT, Wash.—Shippers in the Pacific Northwest will feel a new price pinch next year as ocean carriers participating in the Canada Transpacific Stabilization Agreement (CTSA) plan to raise rates. The CTSA comprises 11 container lines serving the trade from Asia and the Indian Subcontinent to ports and inland points in Canada.
This rate strategy, which addresses rising operational costs, a weaker U.S. dollar, and soaring world fuel prices, is something that can be mitigated somewhat by hedging inland distribution bets, say some freight intermediaries.
“The shipper will always take the brunt of the blow when this happens,” says Janet Papworth, executive vice president of Clearpointt, a transportation and logistics company based in Everett, Washington.
But a greater reliance on surface intermodal keeps some costs down, says Papworth.
“Companies like Target, Lowes, and Pier One, are already seeking creative ways to control costs by spreading out the modal component,” she says. “They can’t do it by using just rail, because those carriers are trying to build capital to create and repair new infrastructure.
Papworth adds that motor carriers are facing the same energy pressures the vessel operators are confronted with.
“So shippers really have to adopt a mixed strategy,” she says.
Starting May 1, CTSA lines will raise West Coast rates by $400 per forty equivalent units (FEU) and inland point and East Coast rates increase $600 per FEU. In addition, a $400 per FEU peak season surcharge will be in effect from June 1 to October 31, 2008.
CTSA member lines have also adopted a voluntary guideline of 12 percent currency adjustment factor (CAF) that will be implemented on January 1, 2008 from all Asia origins except Japan, which will introduce CAF in February 2008.
“As inland transport, cargo handling, equipment and other operating expenses continue to rise, local currency costs accelerate further against US dollar-denominated freight rates,” stated CTSA spokesmen. “Asia-Canada container lines in the CTSA have adopted a 2008 rate program that addresses challenges, as well as soaring world fuel prices, the leading operating cost component for ocean carriers.”
The CTSA, meanwhile, also announced that from January 1, 2008 the fuel surcharges imposed will be $755 per twenty equivalent units (TEU), $950 per FEU, $1,065 per 40-foot high cube, $ 1,220 per 45-foot container and $21 per weight/measure.
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