Subscribe to our free, weekly email newsletter!


Transpacific carriers call for general rate increases this July

TSA members are recommending a further guideline general rate increase for all commodities in the amount of $400 per FEU to the U.S. West Coast and $600 to all other destinations, subject to contract terms, effective July 1, 2013
By Patrick Burnson, Executive Editor
May 29, 2013

Ocean cargo carriers comprising the Transpacific Stabilization Agreement (TSA) announced their intention to raise rates this summer.

TSA executive administrator Brian M. Conrad said transpacific freight rates are still not keeping pace with rising costs, and “a meaningful increase” from current levels is essential to achieve profitability for the benefit of the trade.

“The revenue issue is not going away,” Conrad insisted. “We have to make the case repeatedly that short-term, off-season rates cannot be extended for 12 months or longer in contracts, and that new capacity entering the Asia-U.S. market reflects global trends and an investment in productivity to meet future long-term demand. It does not somehow diminish service value and it does not justify moving cargo at unsustainable levels.”

TSA members are recommending a further guideline general rate increase for all commodities in the amount of US$400 per 40-foot container (FEU) to the U.S. West Coast and $600 to all other destinations, subject to contract terms, effective July 1, 2013.

The news comes at a time when many industry analysts have criticized liner companies for introducing too many vessels despite a lull in demand.

TSA spokesman, Niels Erich, told LM that liner shipping by its nature is subject to periods of overcapacity.
“Ships are ordered based on market forecasts out 15 to 20 years and orders are rarely in full alignment with shorter-term seasonal and cyclical demand,” he said. “Larger ships now being delivered represent an investment in future global trade growth, while achieving efficiencies that lower cost per sailing and help reduce fuel consumption and vessel emissions.”

The supply-demand relationship will always influence pricing, said Erich, but he argued that it should not be allowed to drive rates to the exclusion of fundamental considerations about cost or intrinsic value of the service provided.

“So far we see some increased traffic on Suez routes to the East Coast versus Panama because Suez can handle larger ships cascaded from Asia-Europe into the Pacific,” he added. “But utilization on all transpacific segments has improved since March and we expect continued incremental growth from Asia to the U.S. in 2013.”

About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

83% of surveyed manufacturers either already have IoT implementations in place or plans to deploy within a year.

While the Port of Oakland agrees that Saturday gate operations might ease congestion, they have a few "concerns" of their own

The four international marine container terminals at the Port of Oakland have announced they are developing a program to operate their terminal gates on Saturdays to reduce weekday congestion at the port.

Private fleet managers are facing a remarkable set of challenges in today's demanding business environment. The "from any place at any time" omni-channel fulfillment mindset is just one significant development that companies have had to adapt to in their quest to keep customers and business partners happy.

This is the first guaranteed weekly service direct to the U.S. from Singapore as part of the company’s initiative to enhance its LCL offerings serving Trans-pacific needs.

Article Topics

News · Global Trade · Ocean Cargo · Trade · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA