Freight Rate Rises For Container Trade Planned

ASIA – US – The Transpacific Stabilization Agreement (TSA) has set out its stall by declaring it intends for its members to negotiate a container freight rate increase with customers from 1st May in the usual ‘voluntary guideline’ format equating to $400 per forty foot equivalent unit (FEU)for cargo bound from Asia to the US West Coast and $600 per FEU elsewhere on mainland America. Additionally TSA lines have further recommended full recovery of costs for other equipment sizes, and improved collection of floating bunker and inland fuel charges as well as Panama Canal, Alameda Corridor and other fixed accessorial charges.

The TSA states that its costs for store deliveries have risen sharply and these costs too must be passed on. Finally the organisation is recommending a peak season surcharge of $400 per FEU, effective from June 15, 2011 through November 30, 2011, with those dates subject to adjustment based on changing market conditions.

The TSA say fifteen new or restored services have been recently introduced to meet the strong recovery in the transpacific trade which they expect to settle as a year on year rise of around 12% by the end of 2010. They further say that to meet the forecast increase in demand (high single digit percentages) in 2011 they will ‘require sustained revenue improvement’; a puzzle for many customers who always believed with higher traffic levels would come lower rates.

The TSA describes itself as a research and discussion forum of major container shipping lines serving the trade from Asia to ports and inland points in the U.S. It will be interesting to see if the fifteen box carriers who make up the agreement will be able to maintain the united front they have seemingly kept up as they stared into a disastrous future when the trade collapsed in 2008-09.

Although they have not issued a press release as yet it appears that Maersk Line, a TSA stalwart, have settled their case with Argos after unilaterally raising the contract rates which Argos say were negotiated and legally binding. As we wrote in September, Argos threatened Court action and was in the process of suing Maersk for over $13 million when the carrier trebled the agreed rates. Now it seems that Maersk have agreed to settle and avoid the potential extra costs of litigation.