Thursday, October 9, 2014
Top Story
TSA lines recommend November rate hike
Member container lines in the Transpacific Stabilization Agreement Westbound section, which serve U.S. export trade to Asia, say they have seen freight rates drop below breakeven levels in recent months as demand weakens and costs rise.
To offset losses, TSA shipping lines recommend minimum rates of $300 per-FEU from Los Angeles/Long Beach, and $750 per-FEU for all-water U.S. East and Gulf Coast shipments, for shipments of waste paper, hay, and metal and plastic scrap to China base ports. The new minimum rates are to take effect November 1, 2014.
Low-value, low margin base cargoes such as recyclables and hay account for up to 40 percent of the entire market, according to TSA, and are moving at rates that don’t cover the variable transport or voyage costs.
TSA-Westbound lines added that the specified minimums still do not restore rates to sustainable levels for the commodities and port pairs in question, and it is expected that these, along with rates for other origins and other destinations will need to be higher. The Agreement indicated that further increases are likely in December and in early 2015.
"Many base cargo rates in the Westbound trans-Pacific market are approaching levels that do not justify carriage, especially when you take into account offsetting destination costs such as equipment cleaning and repair and local delivery," said TSA-Westbound executive administrator Brian Conrad.
"That’s bad news for shippers in a market with strong headhaul Asia-U.S. demand for repositioning of empty equipment on westbound ships, as well as for carriers for which recyclables and hay represent a large share of the market. We need to bring those rates up and we believe the market can support the higher minimums."
TSA carriers include APL, China Shipping Container Lines, CMA-CGM, COSCO, Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, "K" Line, Maersk Line, N.Y.K. Line, Orient Overseas Container Line, Yangming Marine, and Zim Integrated Shipping Services.
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