Asia-U.S. container shipping lines have agreed on the urgent need to reset steadily falling freight rate levels in the trade during the past quarter, TSA statement said.
Member carriers in the Transpacific Stabilization Agreement (TSA) said they plan to individually raise all-in freight rates and charges by a minimum of US$400 per 40-foot container, effective January 1, 2012, as an interim step prior to rolling out the Agreement’s customary annual service contracting guidelines. The recommended increases apply to all shipments moving under individual carrier tariffs, as well as service contract cargo in all commodity segments where volume commitments have been met and/or contract provisions permit.
TSA lines indicated that, rather than adopting a single formal guideline increase, they will pursue various approaches to interim cost recovery and revenue restoration, whether in the form of across-the-board general rate increases, peak season surcharges or other mechanisms, depending on each carrier’s unique situation. In all cases, they said, the objective is to meet expected cargo demand growth and begin reversing 2011 revenue losses resulting from slower than expected demand, ongoing market uncertainty and the impact of short-term concessionary rates bleeding into 12-month 2011 service contracts.
“It’s no secret that the transpacific is a highly competitive freight market,” explained TSA executive administrator Brian M. Conrad. “Rate levels during 2011 have steadily eroded despite rising inland transport, cargo handling and other costs. Now, carriers are seeing stronger U.S. holiday season cargo volumes on the heels of positive economic GDP and retail sales data, as well as robust forward bookings leading into the early Lunar New Year factory holidays in Asia. As carriers look toward building a platform for the 2012-13 contract cycle, the feeling is that a correction is both imperative and overdue.”
Conrad emphasized that interim cost recovery and revenue restoration efforts are separate from TSA’s customary annual recommended revenue recovery program in connection with May 2012 contracts, which will be finalized and announced around yearend 2011 or at the beginning of 2012. In addition, he indicated that some lines, on an individual basis, will be pursuing further opportunities for restoring particularly hard-hit rates prior to January 1.
Member carriers in the Transpacific Stabilization Agreement (TSA) said they plan to individually raise all-in freight rates and charges by a minimum of US$400 per 40-foot container, effective January 1, 2012, as an interim step prior to rolling out the Agreement’s customary annual service contracting guidelines. The recommended increases apply to all shipments moving under individual carrier tariffs, as well as service contract cargo in all commodity segments where volume commitments have been met and/or contract provisions permit.
TSA lines indicated that, rather than adopting a single formal guideline increase, they will pursue various approaches to interim cost recovery and revenue restoration, whether in the form of across-the-board general rate increases, peak season surcharges or other mechanisms, depending on each carrier’s unique situation. In all cases, they said, the objective is to meet expected cargo demand growth and begin reversing 2011 revenue losses resulting from slower than expected demand, ongoing market uncertainty and the impact of short-term concessionary rates bleeding into 12-month 2011 service contracts.
“It’s no secret that the transpacific is a highly competitive freight market,” explained TSA executive administrator Brian M. Conrad. “Rate levels during 2011 have steadily eroded despite rising inland transport, cargo handling and other costs. Now, carriers are seeing stronger U.S. holiday season cargo volumes on the heels of positive economic GDP and retail sales data, as well as robust forward bookings leading into the early Lunar New Year factory holidays in Asia. As carriers look toward building a platform for the 2012-13 contract cycle, the feeling is that a correction is both imperative and overdue.”
Conrad emphasized that interim cost recovery and revenue restoration efforts are separate from TSA’s customary annual recommended revenue recovery program in connection with May 2012 contracts, which will be finalized and announced around yearend 2011 or at the beginning of 2012. In addition, he indicated that some lines, on an individual basis, will be pursuing further opportunities for restoring particularly hard-hit rates prior to January 1.