Transpacific ocean carriers remain optimistic

While many shippers are concerned about the progress (or lack thereof) in West Coast labor relationships, ocean carriers serving the trade have expressed optimism by announcing a proposed rate hike.

Encouraged by the initial success of a July 1 revenue improvement effort, and by recent public reassurances that cargo will continue moving as U.S. West Coast longshore labor negotiations extend past the contract deadline, container lines in the Transpacific Stabilization Agreement (TSA) are moving ahead with a second phase of the revenue recovery plan.

On July 15, TSA lines will implement a previously announced second-stage $200 per 40-foot container (FEU) general rate increase (GRI) and peak season surcharge (PSS) for cargo moving to Pacific Southwest ports in California. The increase follows a similar increase taken on July 1. While the revenue increase to the West Coast was split into two stages, TSA carriers applied a full $400 per FEU on July for cargo moving to the Pacific Northwest, U.S. East and Gulf Coasts, and via intermodal to inland U.S. points.

In addition, given current unsustainable freight levels overall and the likelihood of continued strong demand through August, TSA is recommending a further August 1 GRI, with the guideline amount to be determined and announced in mid-July.

“With the overall uncertainty already seen in the eastbound freight market, the central issue for shippers and carriers alike is maintaining service and schedule reliability,” said TSA executive administrator Brian Conrad. “All partners in the supply chain need to be able to respond quickly and cover contingencies in the event of cargo surges or bottlenecks. And they need to know that their costs are covered in the process.”

Conrad said TSA members are pleased to hear that both sides in the West Coast longshore labor negotiations are committed to avoiding cargo disruptions now that the July 1 contract renewal deadline has passed and talks are continuing. “We respect the need for confidentiality in the negotiations, but it makes the kind of reassurances we have received all the more important to maintaining confidence in the market,” he said.