TSA: Cost burden of structural changes must be spread
Transpacific Stabilization Agreement (TSA) executive director Albert A. Pierce said Tuesday that the cost burden of structural changes forced on the market by the boom in Asia cargo “must fall not only on the users, but also on the beneficiaries.”
Pierce, speaking at the Containerisation International Liner Shipping & China Conference held in Ningbo, China, said, “ocean carriers are shouldering an enormous cost burden as the entire transportation and logistics sector makes the gradual, difficult transition to a new type of supply chain network.”
According to the TSA, Asia/U.S. traffic grew 9 percent during the first half of this year to nearly 2.7 million 40-foot containers (FEUs), from 2.48 million FEUs reported in the same period last year, below the TSA’s previous projections of 10 to 12 percent annual growth.
“Consumer demand is driving the flood of retail cargo from Asia. Inevitably, consumers will be asked to pick up a large portion of the costs associated with expanded services, facilities, technology and planning to meet that demand. Those costs are immense and must be spread across the widest possible base,” Pierce said.
TSA carriers will be “seeking rate increases tied strictly to costs” in the forthcoming round of contract discussions, Pierce said.
“Our industry is not just another vendor to be squeezed on price; we are part of the privately financed infrastructure of global trade. We expect hard bargaining from our customers. But the ocean carrier should not be viewed as a convenient last resort for shaving a few cents off retail shelf prices,” Pierce concluded.
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.