U.S. West Coast exporters may face ocean cargo rate hike

Container shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) are recommending a further round of incremental rate increases to dry and selected refrigerated commodities, as part of a comprehensive rate restoration effort throughout 2012.

The adjustments, scheduled to take effect on May 15, 2012, will raise dry commodity rate levels by $50 per 40-foot container (FEU) from Pacific Southwest ports (Los Angeles, Long Beach and Oakland), and by $100 per FEU for all other cargo, moving via all-water or intermodal service from Pacific Northwest ports, from inland U.S. points and from the U.S. East and Gulf Coasts. In addition, WTSA lines are recommending increases of $200 per FEU to refrigerated rates for French fries, frozen vegetables and miscellaneous refrigerated cargoes not covered under commodity-specific programs, for all origins and Asian destinations.

WTSA executive administrator Brian M. Conrad emphasized that successive rate adjustments taken in recent months have been modest and aimed at incrementally restoring rates in the trade to compensatory levels after a period of significant erosion. He added that the diverse and often seasonal nature of westbound traffic makes it necessary to adopt multiple increases for cargo moving under contract throughout the year.

According to Peter Friedmann, executive director of the Agriculture Transportation Coalition, the dynamics of ocean cargo have “flipped” dramatically. With U.S. exports growing by 5-6 percent annually, it’s only matter of time when carriers will reconfigure shipping schedules.

“But this does not mean they will bring in additional capacity right away,” he said. “Carriers will try to make rate hikes stick, but the clock is working against them.”

WTSA is a voluntary discussion and research forum of 10 major ocean and intermodal container shipping lines serving the trade from ports and inland points in the U.S. to destinations throughout Asia.