Asia/Canada lines establish minimum guideline rates
The Canada Transpacific Stabilization Agreement (CTSA) said it has established minimum guideline rates for West Coast port-to-port, intermodal and East Coast all-water shipments, to ensure “adequate cost recovery.”
The group said the announcement builds on a previously announced schedule of rate adjustments to take effect May 1 for Asia/Canada tariff and contract freight rates.
CTSA said member lines have agreed on the need to break out bunker surcharges from all freight rates to float with world bunker prices and the agreement's monthly-adjusted calculation formula.
Effective May 1, CTSA will assess a $4,000-per-40-foot-container (FEU) minimum rate on Toronto/Montreal mini-landbridge shipments for all cargo including freight all kinds, cargo not otherwise specified, and “bulleted” department store merchandise, as well as individual commodities.
A minimum rate of $3,850 per FEU will apply to all-water shipments to Eastern Canada, and a $2,100-per-FEU minimum will be assessed on West Coast port-to-port moves.
CTSA emphasized that the minimums will apply to post-GRI rates, as opposed to having the scheduled rate increases added to them.
The minimum rates are needed, CTSA said, to ensure that the most depressed rates in the trade are restored to levels that contribute meaningfully to carrier revenues and treat all shippers fairly.
The member lines also said bunker surcharges have been outpaced by dramatically rising fuel costs over the 2005-2006 period, and in some cases those surcharges have additionally been mitigated, losing hundreds of thousands of dollars in fuel-related costs per sailing.
Increasing bunker surcharges where appropriate, and then allowing surcharge levels to float with world bunker prices, is essential given that fuel is the largest fixed cost component of a scheduled liner service, and will be effective May 1, CTSA said. It pointed out that a floating surcharge recovers costs more quickly for carriers as fuel prices rise, but also returns savings to shippers quickly as prices ease.
CTSA is a discussion forum of 11 major container shipping lines serving the trade from Asia and the Indian Subcontinent to ports and inland points in Canada. Members are APL, Hyundai, COSCO, 'K' Line, Evergreen, Mitsui O.S.K. Line, Hanjin, NYK Line, Hapag Lloyd, OOCL and Yang Ming.