Tuesday, July 8, 2014

TRANSPACIFIC RATE INCREASE

TSA carriers aim for second rate increase

Carriers in the eastbound Pacific intend to increase their freight rates effective July 15 by $200 per 40-foot container for cargo moving from Asia to Los Angeles-Long Beach.
The Transpacific Stabilization Agreement, a discussion group of carriers in the eastbound Pacific, said the $200 general rate increase / peak-season surcharge is being proposed because carriers were by and large successful in implementing an identical $200 rate increase on July 1.
“Encouraged by the initial success of a July 1 revenue improvement effort, and by recent assurances that cargo will continue moving as U.S. West Coast longshore labor negotiations extend past the deadline, container lines in the TSA are moving ahead with a second phase of the revenue recovery plan,” the TSA stated in a release.
Carriers deploy more capacity on their services to Los Angeles-Long Beach than they do in their trans-Pacific services to the Pacific Northwest and on all-water services to East and GulfCoast destinations, and the big ships are more difficult to fill in Southern California. Therefore the carriers split their rate increase into two stages.
By contrast, many of the carriers on July 1 took a $400 rate increase to ports in the Pacific Northwest, to ports on the East and Gulf coasts and to inland destinations via intermodal rail.
The proposed rate hikes appear to have had an impact in the trans-Pacific, as Drewry in London reported that that last week rates to Los Angeles-Long Beach increased by $200 to $1,850 per FEU. It was the first time the rates increased in five weeks.
The rate hikes are being proposed at a time of uncertainty on the U.S. West Coast because the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents employers, failed to negotiate a new contract by the July 1 deadline. However, the ILWU and PMA issued a joint statement saying negotiations would continue and cargo-handling would not be interrupted.
With cargo volumes remaining strong, the TSA also said today that carriers intend to increase their rates again on Aug. 1, with the exact amount to be announced in mid-July.
The TSA is a discussion group representing 15 of the largest carriers in the eastbound Pacific. Its announcements on GRIs and PSSs are guidelines for its members as the TSA has no enforcement powers.