Transpacific carriers eye changes to rate structure

The CEOs of container shipping lines of the Transpacific Stabilization Agreement (TSA) have reinforced their intentions to ensure that 2009-10 service contracts do not result in the kind of non-compensatory, unsustainable rate levels that began to develop principally in the “spot” rate market during the off-peak this winter. In addition to moving to expire these short term rates, Lines have also indicated their intention to ensure that the progress made in 2008/09 contracting which produced an improved level of fuel cost recovery continues. At their most recent meeting in Tokyo, the 14 TSA carrier CEOs expressed their intention to avoid any further erosion of the current rate structures by expiring, no later than June 30, 2009, any short term rates that have been reduced over the past 4-5 months. The first step in the process of stabilizing the trade will be the action by lines on an individual and non-binding basis to expire reduced short term/spot rates by the end of June at the latest. Step two of the process will be lines seeking to establish rates going forward in 2009-10 contracting at levels $500 to $600 per 40-foot container (FEU) above the low levels that some rates deteriorated to over the last few months.