Trade News > Maritime News > Trade Lanes > Eastbound Trans-Pacific Carriers Seek $800 in Rate Increases

Eastbound Trans-Pacific Carriers Seek $800 in Rate Increases

Bill Mongelluzzo, Associate Editor | Feb 9, 2012 7:04PM GMT

The Journal of Commerce Online - News Story

Ocean container lines say two-step hikes would set baseline for new contracts

Trying to maintain pricing momentum in the trans-Pacific, shipping lines that carry U.S. imports from Asia announced two proposed rate hikes that could increase freight rates $800 per 40-foot container over the next three months.

The Transpacific Stabilization Agreement, a discussion group representing 15 of the largest carriers in the trade lane, called this week for a voluntary rate increase of $300 per FEU to take effect on March 15.

The TSA also recommended an additional increase of $500 per FEU to West Coast ports, and $700 per FEU on intermodal services to interior destinations and on all-water services from Asia to the East Coast.

The proposed increases come as carriers and importers are preparing for to start annual service contract negotiations for the 12-month period beginning on May 1. They also come amid aggressive new Asia-Europe rate increases from individual carriers that would effectively double prices on that troubled trade lane.

Freight rates in the major east-west trade lanes took a prolonged dive last year as a flood of new capacity caused carriers to compete fiercely for cargo. In the trans-Pacific, the spot rate for shipping a 40-foot container from Hong Kong to Los Angeles dropped almost to $1,400 per FEU by mid-December, according to the Drewry Container Rate Benchmark.

Rates suddenly spiked in January, however, as factories in Asia ramped up production before shutting down for the annual Chinese New Year celebrations that began on Jan. 23.

TSA members hope to ride that momentum for another GRI of $300 per FEU to take effect on March 15. “The March (general rate increase) is intended to bring Asia-U.S. freight rates back up to near 2011 contract levels, establishing a baseline for upcoming contract negotiations,” the TSA said in a statement.

They also announced the intention to collect full, floating fuel surcharges to cover the cost of bunker fuel, which is currently around $700 per metric ton.

“The erosion in trans-Pacific rates during 2011 has been well-documented and dramatic,” said Brian Conrad, TSA’s executive administrator. “If carriers adopt a marginal increase that only partially offsets huge losses as costs continue to rise, the result is another 18 months of losses.”

Well, this looks like 2010 to some degree; did the lessons learned in that year come back? and did the absent minded/very cunning one learn anything by not following the crowd with capacity control?
Let the games begin, indeed!!

- By 105DRVRLI on 2/9/12

Let the games begin!! the shippers, nvo's, and steamship lines should all pick three wise men / women and analyze the global volumes, costs, and structures of the major trade lanes and set rates that make sense for the entire year ( adjusting up or down for fuel exposure ).

we are all to blame for this mess, no one part of the supply chain should be expected ( or allowed ) to move freight for less then it costs them. there is no discipline from the lines to hold the line in lean times and they are forced to make it all up and fast to avoid bankruptcy. where do you think the rates would go if only big blue and MSC were left standing?

as an importer and exporter of goods globally, i know that many products are sensitive to freight rates ( and exchange rates ) and the folks that are selling high value goods got a "thatta boy" in 2011 are going to have to approach their boards and explain that in 2012 it has swung the other way.i for one just helped a sales guy in my office qoute some goods based on $2800.00 from yantian to NY, i told him that i expect rates to stay flat in 2012 but to let the customer know that there is a possibility there could be a $400.00 spike in there somewhere.

as an industry we all need to work together closer, business in general has become too transactional with price as the largest driver everywhere. while price will always be important, common sense isn't too shabby either

- By nybco on 2/9/12