Transpacific Container Shippers Plan Freight Rate Rise

A container shipping organisation urged companies on Wednesday to raise Asia-U.S. freight rates by at least $600 per 40-foot container (FEU) from Feb. 9, and indicated that it will follow with a second $600 per FEU increase on March 9.

 

TSA (Transpacific Stabilization Agreement) said the planned increase follows strong cargo demand through the typically slower winter season and heading into the Lunar Yew Year holidays.

 

The recommended freight rates hike correspond to an increase of respectively 30.3 pct. and 23.3 pct.

 

Members of TSA include 15 of the world's biggest container shipping lines such as Denmark's Maersk Line, a unit of A.P. Moller-Maersk, privately owned Switzerland-based Mediterranean Shipping Company (MSC), French privately held CMA CGM, China's COSCO Shipping, Korea's Hanjin Shipping and others.

 

The container shipping industry has been struggling with overcapacity because vessel capacity is outstripping volumes of goods for transport as a result of the global economic downturn.

 

Executive administrator Brian Conrad said the excess vessel supply reported globally is often overstated in the transpacific because it does not take into account infrastructure and other operational constraints.

 

"The primary imbalance in the transpacific is not so much one of supply versus demand, but rather one of costs versus revenue, that in turn drives service," Conrad said in the statement.

 

Over 90 percent of the world's trade is carried by sea, but freight rates plunged to unprofitable levels for most carriers in 2013 and 2014 as a result of overcapacity in the market.

 

Spot freight rates are calculated and published every week by Shanghai Shipping Exchange. Last week rates for transport of 40-foot containers from Asia to the U.S. West Coast stood at $1,979.

 

Founded in 1989, the TSA calls itself a "research and discussion forum of major container shipping lines" serving the trade from Asia to the United States.