Container shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) on Tuesday announced a new round of incremental dry cargo rate increases, part of an ongoing effort to stem revenue erosion in the U.S.-Asia cargo market.
From Apirl 1, the lines will seek a $50 per FEU increase from Los Angeles, Long Beach and Oakland, and a $100 per FEU increase from all other ports, including intermodal cargo, on shipments to Asia.
The members also said they have reaffirmed their commitment to fully apply higher bunker fuel surcharges scheduled to take effect on April 1 on top of the adjusted base rates.
Agreement executive director Brian Conrad said it is critical for carriers in the current market environment that the westbound transpacific trade makes a greater contribution to network revenues.
“This is a moment of significant opportunity for U.S. exporters to Asia, and carriers want to ensure that service levels – in terms of schedule reliability, space and equipment availability, accurate and timely documentation, or other requirements – are in place to maximize that opportunity,” Conrad said.
Conrad said westbound trade has unique challenges – the two-to-one cargo imbalance favoring eastbound imports from Asia, the operational and cost challenges of getting empty containers to remote inland load points, and capacity constraints due to the mix of heavier westbound cargoes and empty equipment on a typical sailing.
“All of these factors add to cost and load planning complexity and must be adequately addressed in the rate structure,” he said.
Conrad said WTSA lines are keenly aware of the low margins facing many westbound shippers of raw commodities and semi-finished goods, but said the liner industry is under tremendous financial pressure, with operational costs rising.
“Since the beginning of 2012 lines have seen their fuel costs rise steadily, and recently break through the previous record levels set in mid-2008,” he said. “With bunker fuel prices now exceeding $750 per metric ton and bunker accounting for 60 percent of operating expense on a typical sailing, absorbing any portion of that cost on a sustained basis is not an option.”
WTSA members are APL, COSCO Container Lines, Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, NYK Line, OOCL, and Yang Ming.
WTSA seeks to raise rates, collect bunker
