Shipping lines operating in the Pacific plan to increase freight rates to the U.S. West Coast by $800 per 40-foot container, some 50 percent beyond recent spot rates on the troubled eastbound trade lane.
The Transpacific Stabilization Agreement, a discussion group of container lines, issued the voluntary guidelines late Tuesday and also called for an additional $1,000 per FEU for intermodal shipments to interior U.S. destinations and on all-water services from Asia to the East Coast.
The TSA also announced a proposed peak season surcharge of $400 per-FEU effective Aug. 1, 2010. The guidelines also called for full collection of bunker fuel surcharges and other accessorial charges.
The proposed increases are aimed at building rates back up to levels the carriers were charging before pricing took a sharp dive downward in late 2008, triggering steep financial losses at container lines and leading many to consolidate services in an effort to restore equilibrium.
After a steady decline this summer that took rates below $1,000 per FEU on the Hong Kong to Los Angeles market, a series of increases dubbed “rate restoration” have taken the price to beyond $1,400 per FEU on that spot market.
Based on the spot charges, which can be far different from contract rates, the $800 addition would push rates beyond $2,000 per FEU for the first time since November 2008.
As a discussion agreement, TSA has no enforcement powers. Its member lines can, and often do, deviate from the guidelines in confidential service contract negotiations with customers. Those negotiations take place in the early spring, with the service contracts normally signed in May and June.
TSA member lines look for a modest increase in cargo volumes next year, but expect 2010 to remain a year of significant uncertainty.
The Journal of Commerce Online
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