Transpacific carriers plan to “double down” on rates

As reported in LM, TSA had announced a March 15 $300 general rate increase which they expect to be widely applied, to address rates that remain below baseline levels at that time.

By ·

Having played their hand on an earlier rate hike announcement, the 15 member carriers in the Transpacific Stabilization Agreement (TSA) are recommending a further increase of $400 per 40-foot container (FEU) effective April 15, 2012.

As reported in LM, TSA had announced a March 15 $300 general rate increase (GRI) which they expect to be widely applied, to address rates that remain below baseline levels at that time.

According to TSA executive administrator Brian M. Conrad, The recommendation reaffirms the resolve of transpacific container lines to improve Asia-U.S. market rates as they move forward in a new round of contract talks with customers. The increase comes just ahead of the previously announced May 1 recommended increase of $500 per FEU for US West Coast cargo and $700 per FEU for all other shipments.

He spoke with LM and its sister publication, Supply Chain Management Review, last week in advance of his speech at a an industry event staged in Southern California focusing on Asia Pacific maritime issues.

Although at that time he did not signal another rate “adjustment,” he did indicate that rates might be hiked to sustain carrier operations:

“Current market uncertainty worldwide has made it difficult to plan for long-term reinvestment in and configuration of carriers’ global services,” he said Markets are increasingly news-driven and prone to wild swings.”

TSA lines also stressed that they remain committed to recovering record high fuel costs through separate bunker and inland fuel surcharges. They also say they intend to implement a peak season surcharge (PSS) later in the year, with the amount and duration to be determined soon, based on a review of anticipated market conditions moving into the summer and fall months.

“Carriers operating in the Pacific are at a critical juncture,” said Conrad. “Once again, as in 2009, we are back to a situation in which nearly all major carriers in the trade are moving cargo at a loss.  For any carrier rate or cost recovery effort to be meaningful in 2012-13, it must reflect an actual increase from rates in effect at the beginning of the previous year; and it cannot extend promotional short-term rates in select trade segments to all commodities and all routes for 12 months.”

Conrad pointed to the service consolidation already seen in the trade, including elimination of service strings, and deteriorating schedule reliability. “Supply and demand is no longer the only or even the primary consideration in carrier pricing,” he said. “The conversation needs to focus on sustained carrier viability and service quality in a major, recovering trade lane with complex and sophisticated service needs.”

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

Asia · Ocean Cargo · Ocean Freight · All Topics
Latest Whitepaper
Case Study: LEAN Yields Big Results
Every day, companies across a wide range of industries use LEAN in their supply chains, warehouses and distribution centers, finance departments, and customer service centers, among other areas. LEAN practices improve safety, quality, and productivity by extracting cost and waste from all facets of an operation – from the procurement of raw materials to the shipment of finished goods.
Download Today!
From the October 2016 Issue
Over the past decade we’ve seen a major trend in regards to safety regulations for freight transport within the United States as well as for import and export shippers—that trend is the “international­ization” of rules and regulations.
European Logistics Update: Post-Brexit U.K. moving ahead, but in which direction?
Badcock Home Furniture &more: Out with paper, in with Cloud TMS
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
How API Technology Connects the Transportation Economy
Dynamic decision making is made possible through accurate, actionable data. When combined with progress in data science and the Internet of Things, technology companies that add value to direct-to-carrier APIs and combine them with high-power data analytics will create new concepts for the information economy.
Register Today!
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....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...

2016 Quest for Quality: Winners Take the Spotlight
Which carriers, third-party logistics providers and U.S. ports have crossed the service-excellence...
Regional ports concentrate on growth and connectivity
With the Panama Canal expansion complete, ocean cargo gateways in the Caribbean are investing to...