Americas News
Transpacific Container Lines Agree on Rate Increase Pact
In response to a volatile container freight market "facing the prospect of further consolidation", member shipping lines in the Transpacific Stabilization Agreement (TSA) say they will increase rates across the board and impose a revenue-improving service contract program for next year.
The initiatives are intended to ensure greater pricing predictability and service reliability, according to a November 30 TSA press release.
Next month, the lowest current market rate levels will be restored to at least $950 per 40-foot container (FEU) to the U.S. West Coast; $1,700 per FEU to the U.S. East and Gulf Coasts; and $2,950 per FEU for intermodal moves to key Chicago-area inland point destinations.
TSA members are recommending that for January 1, a general tariff rate increase of $1,200 per FEU to the West Coast and $1,600 per FEU to the East and Gulf Coasts should be implemented.
Moreover, service contracts for 2016-17, most of which take effect on May 1, will have longer-term minimum rates of $1,700 per FEU to the West Coast, and $2,900 per FEU to the East and Gulf Coasts; there will also be adjustments to charges and practices such as absorption of chassis costs; free-time allowances; and port and rail demurrage charges.
"Transpacific lines are adjusting to a new normal of larger ships and complex alliances, necessitated by cost and environmental compliance pressures – all in the context of an uncertain global economic environment," noted Brian Conrad, executive administrator for the TSA.
"Irrespective of cyclical supply-demand issues, it is critical that these global infrastructure providers get their pricing right and fully recover their costs through meaningful, staged rate increases heading into 2016."
Given that the fewer ports of call made by larger line haul vessels have caused higher feeder service and other costs, lines will also review their feeder port add-on schedules and "make specific adjustments to those add-ons as warranted in upcoming contracts."
Rising costs are an on-going TSA issue: last October it announced that its carriers would introduce new rate formulas with a low-sulfur fuel cost recovery charge to offset extra costs caused by Emission Control Area (ECA) regulations.
