WTSA: U.S. exporters must “pay own way”
WTSA: U.S. exporters must “pay own way”
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U.S. exporters already encountering difficulties shipping their goods abroad have been told they must pay more to cover shipping lines’ mounting operational costs.
Brian M. Conrad, executive administrator of the Westbound Transpacific Stabilization Agreement, a discussion and research forum for 10 ocean carriers serving the trade from U.S. ports and inland points to destinations throughout Asia, said WTSA lines have secured modest, incremental freight rate gains in the past two years, but not enough to match the rise in inland transport and equipment-related costs.
“With the inbound Asia-U.S. trade flat, and with fuel, inland intermodal and other costs rising, westbound traffic must truly begin to pay its own way,” he said in statement issued today.
The weak dollar has boosted demand for U.S. goods, yet exports are being stymied by cutbacks in transpacific vessel tonnage and trouble finding containers or the equipment needed to move them.
Conrad pointed out that the situation is exacerbated by the export centers of production often being a long way from where container imports are delivered.
“Unfortunately, retail merchandise from Asia is not delivered anywhere near where pork, cotton or chemical resins are loaded for export. Sometimes specialized equipment is required. Positioning that equipment entails transport, storage and handling costs that lines will continue to recover through the base rate structure,” Conrad said.
The WTSA executive expects the same operational factors as well as soaring fuel prices to force freight rates higher in the near to mid-term. The WTSA’s member lines are this year looking to introduce full, floating bunker fuel surcharges in all contracts to cover what Conrad said has been a 60 percent increase in operating cost per slot over the last 18 months as a direct result of fuel prices doubling since January 2007.
“In many cases carriers are not recovering the pre-2007 base cost, let alone that increase,” he said.
Under a previously announced schedule, WTSA carriers will July 1 raise their bunker surcharges to $600 per 40-foot container (FEU), or the full formula level in effect at the time, whichever is lower. As of Oct. 1, surcharge levels for all tariff and contract cargo will be increased to the full, floating bunker surcharge in effect at that time, and will then be adjusted monthly to float with fuel price fluctuations under the WTSA calculation formula.
WTSA members are APL, COSCO Container Lines, Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, 'K' Line, NYK, OOCL and Yang Ming. ' Simon Heaney