Asia-US box freight set to increase by $600 from June 10 on peak season surcharge
Sea freight between Asia and the US is set to increase by nearly $600 a 40-ft container. This is due to a peak season surcharge imposed by shipping lines operating in the sector to be effective from June 10, The Hindu Business Line reports.
The lines, which are part of the Transpacific Stabilisation Agreement, said that the Asia-US container shipping lines see a strong summer ahead in terms of cargo traffic.
This was as suggested in the US consumer spending and retail sales trends, and confirmed in carrier forward bookings.
In preparation, member lines in the TSA are recommending a peak season surcharge of $600/40-foot container and proportionate levels for other equipment sizes. In India, the increase is likely to upset exporters of garments and leather products.
According to the TSA, the surcharge is to cover ‘extraordinary' seasonal costs associated with anticipated cargo surges. This will require leasing of vessel and equipment capacity, routing or schedule changes, special port terminal or inland transportation arrangements, added staffing or other measures to cover short-term contingencies.
“The lines see a strong outlook for the coming months, with utilisation already in the 95 per cent range,” explained TSA executive administrator, Mr Brian M. Conrad. “At the same time, they continue to dig out after a long period of serious financial losses, and want to be sure they are well-positioned to ramp up services as the trade rebounds.”
TSA is a research and discussion forum of 15 major container shipping lines serving the trade from Asia to ports and inland points in the US.
Its members include APL Ltd, China Shipping Container Lines, CMA-CGM and COSCO Container Lines, Ltd.
Demand vs supply
According to the TSA, ship capacity growth is likely to surpass cargo demand growth throughout 2012-13.
Construction costs as much as 40 per cent below pre-recession levels have encouraged a ‘rash of orders' in 2010-11 - most for ships above 10,000-TEUs (twenty foot equivalent unit) capacity. Those vessels have mainly been deployed in the Asia-Europe and intra-Asia markets but many of the ships - typically in the 8,000-TEU range - cascaded into other trades as a result and have found their way into the Pacific.
An average ship in the trans-Pacific trade at present is about 6,500-TEU in size.
By the end of 2012, that will be the minimum size, and by the end of 2013, research firm Alphaliner estimates the minimum vessel size at 8,000 -TEU.
Below that size, vessels do not have the scale and the lower per slot costs to profitably move freight at current rate levels.
But carriers increasingly find themselves squeezed.
Most US ports still do not have the draft or terminal productivity to efficiently accommodate 8,000-TEU ships fully loaded.
And the Panama Canal will not be able to handle ships larger than 4,600-TEU before 2014, the TSA said.