APRIL 2012

Container shipping lines increase rates

Container shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) have announced a new round of incremental dry cargo rate increases, part of their ongoing effort to stem revenue erosion in the U.S.-Asia cargo market.

Effective April 1, WTSA recommended a schedule of increases that will raise dry commodity rate levels by $50 per 40 foot container (FEU) from Pacific Southwest ports (Los Angeles, Long Beach and Oakland) to Asia, and by $100 per FEU for all other cargo.

They would be moving via all-water or intermodal service from Pacific Northwest ports, from inland U.S. points and from the U.S. East and Gulf Coasts.

WTSA lines also reaffirmed their commitment to fully apply higher bunker fuel surcharges scheduled to take effect on April 1 on top of the adjusted base rates. Agreement executive director Brian M. Conrad said it is critical for carriers in the current market environment that the westbound transpacific trade makes a greater contribution to network revenues.

“This is a moment of significant opportunity for U.S. exporters to Asia, and carriers want to ensure that service levels – in terms of schedule reliability, space and equipment availability, accurate and timely documentation, or other requirements – are in place to maximize that opportunity,” Conrad stressed. He noted the unique challenges of the westbound trade, such as the 2:1 cargo imbalance favoring eastbound imports from Asia, operational and cost challenges getting empty containers to remote inland load points, and capacity constraints due to the mix of heavier westbound cargoes and empty equipment on a typical sailing. “All of these factors add to cost and load planning complexity and must be adequately addressed in the rate structure,” he pointed out.

Regarding fuel surcharges, Conrad said WTSA lines are keenly aware of the low margins facing many westbound shippers of raw commodities and semi-finished goods. But he cited independent industry estimates of carrier’ collective global losses of more than $5 billion as demand slowed, rates fell and operating costs – especially fuel costs – increased dramatically.