Transpacific carriers are forecasting up to nine percent cargo growth from Asia to the US in 2011 and have begun softening up shippers in preparation for hikes in freight rates and a peak season surcharge.
Transpacific Stabilisation Agreement (TSA) chairman and Hanjin Shipping chief executive officer Y M Kim said added revenue was necessary to support the service levels "customers have come to expect in this trade". "Maintaining a stable infrastructure for the movement of goods is no less important today than in past years, and that will take sustained levels of carrier investment over time," Kim said, announcing a 2011-12 voluntary guideline contract programme.
The member lines of the TSA will be hoping to avoid the bitter negotiations that have characterized shipper-carrier contract meetings in the past few years. The global economic slowdown exacerbated sharp divisions between lines and their customers as freight rates plummeted and signed contracts were torn up.
At the centre of the TSA recommendation for upcoming contracts - most taking effect on May 1, 2011 - are suggested rate increases of US$400 per FEU for cargo moving to US West Coast ports and $600 per FEU for all other cargo.
TSA lines have further recommended full recovery of costs for other equipment sizes, and improved collection of floating bunker and inland fuel charges as well as Panama Canal, Alameda Corridor and other fixed accessorial charges.
Carriers called for adjustments to store-door delivery rates as warranted, to levels that adequately compensate carriers for rising costs in providing those services.
The TSA is also recommending a peak season surcharge of $400 per FEU, effective from June 15 through November 30, with the dates subject to adjustment based on market conditions.
TSA carriers noted a dramatic trade wide improvement in the supply-demand situation for freight shippers during 2010. Asia-US cargo growth for the year has been surprisingly strong, and is forecast to settle near 12 percent by year-end.
According to industry analysts AXS Alphaliner, transpacific capacity grew by 18.6 percent in the year since November 2009. The first three quarters of 2010 saw 15 new and restored services enter the trade to meet demand, in part the result of improved rate levels.
"The transpacific market is clearly returning to some kind of 'normality', " Kim said.
Carriers acknowledged that the financial picture had improved significantly this year, as the world economy recovers from the 2008 financial crisis. However, TSA said further revenue recovery was needed to restore financial stability.
"Carriers have experienced solid revenue growth across their entire networks in 2010, but two strong quarters in the transpacific - a highly competitive freight market with very thin margins - still do not fully offset two years of heavy losses," Kim explained. "We said last year that we would not seek to recover all our losses in one year."
TSA executive administrator Brian Conrad pointed out that a number of operating costs had continued to rise steadily, including labour, container handling, inland transport, and both purchase and leasing of container equipment during the persistent global shortage.
The appreciation of some Asian currencies has effectively increased local currency costs relative to US dollar-denominated freight rates.
Administrator Conrad said individual lines would be discussing with customers in greater detail the background to their revenue and cost recovery objectives as contract negotiations move forward.
Transpacific Stabilisation Agreement (TSA) chairman and Hanjin Shipping chief executive officer Y M Kim said added revenue was necessary to support the service levels "customers have come to expect in this trade". "Maintaining a stable infrastructure for the movement of goods is no less important today than in past years, and that will take sustained levels of carrier investment over time," Kim said, announcing a 2011-12 voluntary guideline contract programme.
The member lines of the TSA will be hoping to avoid the bitter negotiations that have characterized shipper-carrier contract meetings in the past few years. The global economic slowdown exacerbated sharp divisions between lines and their customers as freight rates plummeted and signed contracts were torn up.
At the centre of the TSA recommendation for upcoming contracts - most taking effect on May 1, 2011 - are suggested rate increases of US$400 per FEU for cargo moving to US West Coast ports and $600 per FEU for all other cargo.
TSA lines have further recommended full recovery of costs for other equipment sizes, and improved collection of floating bunker and inland fuel charges as well as Panama Canal, Alameda Corridor and other fixed accessorial charges.
Carriers called for adjustments to store-door delivery rates as warranted, to levels that adequately compensate carriers for rising costs in providing those services.
The TSA is also recommending a peak season surcharge of $400 per FEU, effective from June 15 through November 30, with the dates subject to adjustment based on market conditions.
TSA carriers noted a dramatic trade wide improvement in the supply-demand situation for freight shippers during 2010. Asia-US cargo growth for the year has been surprisingly strong, and is forecast to settle near 12 percent by year-end.
According to industry analysts AXS Alphaliner, transpacific capacity grew by 18.6 percent in the year since November 2009. The first three quarters of 2010 saw 15 new and restored services enter the trade to meet demand, in part the result of improved rate levels.
"The transpacific market is clearly returning to some kind of 'normality', " Kim said.
Carriers acknowledged that the financial picture had improved significantly this year, as the world economy recovers from the 2008 financial crisis. However, TSA said further revenue recovery was needed to restore financial stability.
"Carriers have experienced solid revenue growth across their entire networks in 2010, but two strong quarters in the transpacific - a highly competitive freight market with very thin margins - still do not fully offset two years of heavy losses," Kim explained. "We said last year that we would not seek to recover all our losses in one year."
TSA executive administrator Brian Conrad pointed out that a number of operating costs had continued to rise steadily, including labour, container handling, inland transport, and both purchase and leasing of container equipment during the persistent global shortage.
The appreciation of some Asian currencies has effectively increased local currency costs relative to US dollar-denominated freight rates.
Administrator Conrad said individual lines would be discussing with customers in greater detail the background to their revenue and cost recovery objectives as contract negotiations move forward.