Wednesday, October 31, 2012

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TSA container lines propose 2013-14 contract rates

Container carriers hope to increase rates on the Asia-U.S. trade route in the early days of their 2013-14 contract negotiations.

Shipping lines have experienced flat or declining sales growth due to overcapacity and fuel costs, and as contracts expire, further revenue improvements are critical to the industry, according to Transpacific Stabilization Agreement member carriers.

In order to create a fair baseline rate for contracts through mid-2014, member container lines in the TSA recommend a dry cargo general rate increase of $400 per-FEU to the U.S. West Coast, and $600 per-FEU for all other destinations, effective December 1, 2012.

"Even though contracts run 12 months or more, rates ebb and flow throughout the year depending on contract timing and structure, as well as cargo seasonality" said TSA executive administrator Brian M. Conrad. "This is especially true in the fourth quarter, as peak season traffic begins to ease, and more so this year, as U.S. holiday retail shipments were moved forward amid labor uncertainty. Lines want to be sure that revenue gains made earlier in the year are not prematurely eroded in upcoming contracts."

TSA carriers also approved a rate guideline to take effect January 1, 2013 on refrigerated cargo from all Asian origins to all U.S. destinations, of $1,500 per-FEU.

"This increase follows years of gradual rate deterioration," said Conrad. "The message to the trade is that rates are unsustainable and will not support the purchase, lease, operation and maintenance of very sophisticated and costly equipment."

TSA is a research and discussion forum of major container shipping lines serving the Asia-to-U.S. route. TSA members include APL, China Shipping Container Lines, CMA-CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping Co., Hapag-Lloyd, Hyundai Merchant Marine, Kawasaki Kisen Kaisha (K Line), Maersk Line, Mediterranean Shipping Co., Nippon Yusen Kaisha (N.Y.K. Line), Orient Overseas Container Line, Yangming Marine Transport Corp., and Zim Integrated Shipping Services.

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