Transpacific ocean cargo carriers declare rate hike

Ocean cargo carriers comprising the Transpacific Stabilization Agreement Westbound section contend that there is an “urgent need” to begin rate restoration efforts in anticipation of fourth quarter cargo growth.

By ·

Ocean cargo carriers comprising the Transpacific Stabilization Agreement (TSA) Westbound section contend that there is an “urgent need” to begin rate restoration efforts in anticipation of fourth quarter cargo growth.

“Rates have drifted down even more than usual during the typical summer slack period, to unsustainable levels,” said TSA Westbound executive administrator Brian M. Conrad.

After months of uneven demand and gradually eroding freight rates in the U.S.-Asia trade lane, container shipping lines argue that it is time to begin reversing the trend.

Member carriers have announced plans to raise freight rates, for all commodities and from all U.S. origin points, by at least $100 per 40-foot container (FEU) by no later than October 1, 2013.

Several industry analysts – including Walter Kemmsies, chief economist at the at the coastal and civil engineering firm Moffatt & Nichol – are forecasting a surge in outbound demand for U.S. agricultural commodities.

A number of TSA-Westbound lines have already filed individual increases across the board or in key market segments, to take effect during September, and those will go forward as scheduled; other members are looking to an October 1 effective date.

“Not only are we headed into the busiest time of year for the trade, but we are also seeing signs in the market that U.S. exports to Asia are poised for recovery in coming months,” said Conrad.

Conrad stressed that lines view the $100 per FEU general rate increase (GRI) amount as a minimum, given current rate levels.

“Anytime the lines undertake a GRI, they are mindful of the price sensitivity for many westbound cargoes and the need for an incremental approach in restoring rates,” he said. “At the same time we need to be clear that the recommended GRI will not, by itself, raise rates to levels that make an adequate contribution to round trip revenue.”

While the GRI is voluntary and will be implemented by lines individually according to their specific needs at this time, Conrad said transpacific carriers remain under considerable financial pressure in the current environment and will be looking at further opportunities for revenue recovery in late 2013 and early 2014.


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

Container · Exports · Ocean Cargo · Ports · All Topics
Latest Whitepaper
The View from the New “Single Window”
The single window, officially known as the "International Trade Data System," operates via the Customs and Border Protection (CBP) agency's Automated Commercial Environment (ACE) platform, and serves as a single point of contact for all trade filings.
Download Today!
From the March 2017 Issue
WMS vendors are stepping up to the plate and developing functionalities and solutions that meet the complex needs of today’s companies. Our top analysts take a peek into these developments and discuss the DC of the future and the software that will support it.
5 Supply Chain Trends Happening Now
2017 Warehouse/DC Equipment Survey: Investment up as service pressures rise
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
2017 Trucking Regulations & Infrastructure Update
In this session our panel brings shippers up to date on the state of transportation regulations. Discussion will revolve around regulatory reform, aspects of the federal highway bill and what the transportation landscape looks like in the early days of the Trump administration.
Register Today!
EDITORS' PICKS
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...
ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...

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...