TSA carriers push for higher rates to cover costs
Carriers in the Transpacific Stabilization Agreement (TSA) said today they will seek rate increases “reflecting structural changes in the market that have led to sustained higher volumes, service requirements and costs,” in the forthcoming round of contract discussions.
“Better planning and communication, spreading out of shipments, diversified port gateways, extended Southern California gate hours and rail and port terminal technology improvements,” this year all helped to eradicate congestion that blighted U.S. West Coast ports in the summer 2004, the TSA said.
The TSA said ships are running 90 to 95 percent full in the current peak season. “Carriers met shipper expectations during 2005. They delivered the new Northwest and all-water East Coast services customers requested, and improved transit time and schedule reliability at a time of near-record vessel charter costs,” said Albert A. Pierce, TSA executive director.
“A 60 percent increase in Panama Canal round-trip transit costs; a ratio of eastbound equipment and loads to westbound of 2.5 to 1; significant carrier investment in shoreside terminals; and empty containers making up a third to half of total throughput at major ports. All of these components make cost recovery the top priority for carriers in 2006-2007,” Pierce said.
The TSA expects inland rail delays, truck driver shortages, as well as congestion and delays in the Panama Canal to reduce the effective capacity of new and bigger ships joining the transpacific trade lane next year.
Last week the TSA said its carriers were formulating a revised method for applying fuel surcharges in a bid to recoup millions of lost dollars. Today, the TSA lines said they will extend the peak season surcharge for all-water Asia/U.S. East Coast services through Jan. 31. “That segment of the market is expected to run at full capacity through early 2006 and will entail higher round-trip sailing costs than port-to-port or intermodal West Coast service,” the TSA said.
According to the TSA, demand for Asia/U.S. cargo is consistent with its previous projections of 10 to 12 percent annual growth, with first half growth up 9 percent to 2.7 million 40-foot containers (FEUs) from 2.48 million FEUs reported in the same period last year.
The TSA said lines will produce a rate program for the 2006-2007 service contract negotiation season sometime in late October. “Member lines are confident ' that a still robust market should be able to support a new round of rate adjustments aimed at cost recovery,” the TSA said.
TSA members are: American President Lines, CMA CGM, Kawasaki Kisen Kaisha, COSCO Container Lines, Nippon Yusen Kaisha, Evergreen Marine, Orient Overseas Container Line, Hanjin Shipping Co., Hapag-Lloyd, Mitsui O.S.K. Lines, Yang Ming Marine and Hyundai Merchant Marine.