TSA Recommends Rate Hikes

Shipping line agreement calls for significant rate hike for container movement from the United States to Asia.

September 3, 2013
Recycling Today Staff
Member carriers in the Transpacific Stabilization Agreement (TSA) Westbound have announced plans to raise freight rates for all commodities and from all U.S. origin points by at least $100 per 40-foot container (FEU) by no later than Oct. 1, 2013. 

A number of TSA-Westbound lines have already filed individual increases across the board or in key market segments to take effect during September, and those will go forward as scheduled; other members are looking to an Oct. 1 effective date. The decision to announce the rate hikes follows several months of uneven demand and gradually eroding freight rates in the U.S.-Asia trade lane, which has resulted in container shipping lines saying it is time to begin reversing the trend.

TSA Westbound executive administrator Brian Conrad says there is an urgent need to begin rate restoration efforts in anticipation of fourth quarter cargo growth. “Rates have drifted down even more than usual during the typical summer slack period, to unsustainable levels. Not only are we headed into the busiest time of year for the trade, but we are also seeing signs in the market that U.S. exports to Asia are poised for recovery in coming months.”

Conrad stresses that lines view the $100 per FEU general rate increase (GRI) amount as a minimum, given current rate levels. “Anytime the lines undertake a GRI, they are mindful of the price sensitivity for many westbound cargoes and the need for an incremental approach in restoring rates,” he says. “At the same time, we need to be clear that the recommended GRI will not, by itself, raise rates to levels that make an adequate contribution to round trip revenue.” 

While the GRI is voluntary and will be implemented by lines individually according to their specific needs at this time, Conrad said transpacific carriers remain under considerable financial pressure in the current environment and will be looking at further opportunities for revenue recovery in late 2013 and early 2014.

Members of the TSA include: American President Lines (APL) Ltd., Kawasaki Kisen Kaisha Ltd. (K Line), China Shipping Container Lines, Maersk Line, CMA-CGM Mediterranean Shipping Co., COSCO Container Lines Ltd., Nippon Yusen Kaisha (N.Y.K. Line), Evergreen Line Orient Overseas Container Line Ltd., Hanjin Shipping Co. Ltd., Yangming Marine Transport Corp., Hapag-Lloyd AG, Zim Integrated Shipping Services and Hyundai Merchant Marine Co. Ltd.