Tuesday, May 6, 2014

CONTAINER LINES

Is this collusion or the economic impact of collective need?

TSA carriers plan higher rates for Asia-bound meat, poultry
PREMIUM
Tuesday, May 06, 2014
The Transpacific Stabilization Agreement (TSA) is recommending a freight rate increase of $700 per 40-foot container on July 1 for “protein shipments” --refrigerated meat such as beef, pork and chicken -- moving to Asia.
The 15 container shipping lines in the TSA say they are looking forward to a stronger 2014 for U.S. beef, pork and poultry exports to Asia, but that “a key concern among carriers as the peak shipping season begins is ensuring an adequate supply of refrigerated and temperature-controlled container equipment.”
“Increased demand from a growing urban middle class in Asia is reopening markets for U.S. exporters, at a time when refrigerated equipment has migrated to other trades and is more costly to purchase and lease, and when freight rates do not fully cover acquisition, maintenance and operating costs. At the same time, most refrigerated rates for so-called ‘protein’ cargoes are at their lowest levels in more than five years,” TSA said.
“We’re seeing a perfect storm develop in the westbound transpacific refrigerated segment,” said TSA-Westbound Executive Administrator Brian Conrad. “On top of expected organic demand growth in Asia and normal competition for equipment from other seasonal cargoes such as summer fruits, a shortage of refrigerated rail cars in the U.S. is driving inland intermodal demand for containers and generator sets. Premature scrapping of specialty refrigerated ships is drawing equipment to north-south trades, particularly Central and South America. Sustainable rates are critical to equipment availability in this environment.”
Conrad said TSA-Westbound is announcing the guideline rate increase early to provide adequate notice for protein shippers who typically book export sales 60 to 90 days in advance.