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 ·

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

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 [email protected]

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!

Article Topics

Global Trade · Ocean Cargo · Trade · All Topics
Latest Whitepaper
SaaS Supply Chain Management Systems
A guide to better understanding the market, the software and the benefits
Download Today!
From the January 2017 Issue
Following LM tradition, we start off the New Year with our annual “Rate Outlook” cover story and subsequent Webcast
Moore on Pricing: The other TMS functional options
2017 Rate Outlook: Where are freight transportation rates headed?
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Rate Outlook: Where are freight transportation rates headed?
Join our panel of top oil and transportation analysts for an exclusive look at where rates are headed and the issues driving those rate increases over the coming year.
Register Today!
EDITORS' PICKS
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...

Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...
Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....