Carriers to raise rates on Asia - US routes
November 15, 2011
Carriers forced to act after overcapacity causes widespread losses.
AP Moeller-Maersk, the world’s largest container carrier, and 14 other shipping lines plan to raise rates on Asia-US routes beginning January 1 after a price war and overcapacity caused industry- wide losses.
The companies, which also include Neptune Orient’s APL and CMA CGM, intend to impose a levy of at least $400 per 40- foot container as a temporary measure ahead of the start of annual contract negotiations, the Transpacific Stabilization Agreement said. The TSA shipping group has limited antitrust protection that lets it set rates guidelines.
The increase will be a stop gap measure ahead of the usual round of annual contract negotiations that typically takes place in March and April ahead of the May 1 start for most 12 month contracts.
The TSA said each member would individually lift all-in rates “as an interim step prior to rolling out the Agreement’s customary annual service contracting guidelines”.
The recommended increases apply to all shipments moving under individual carrier tariffs, as well as service contract cargo in all commodity segments where volume commitments have been met and/or contract provisions permit.
Eastbound transpacific spot rates are some 30% lower than a year ago, with Drewry’s latest Hong Kong-Los Angeles benchmark down to $1,521 per feu last week from $2,170 in November 2010.
The traditional peak season was both brief and weak, and several smaller carriers have been forced to withdraw from the trade or cut some services, including Horizon Lines, Matson, Grand China Shipping and, earlier in the year, The Containership Co.
The shipping lines intend to take advantage of a pick-up in bookings ahead of the late January Lunar New Year holidays to win higher rates after waning consumer confidence and slower- than-expected demand scuttled the implementation of peak-season surcharges.
The third-quarter slump caused Maersk, based in Copenhagen, to last week say that its container unit would make a loss this year, compared with earlier predictions for a profit.
“Rate levels during 2011 have steadily eroded despite rising inland transport, cargo-handling and other costs,” Brian M. Conrad, the TSA’s executive administrator, said in the statement.
“As carriers look toward building a platform for the 2012-13 contract cycle, the feeling is that a correction is both imperative and overdue.”
The planned rate increase will prevent reductions offered this year from affecting the next round of annual contracts, starting around May, the group said. The TSA plans to announce guidelines for the next contracts around year end, it said.
The other members of the group comprise Kawasaki Kisen Kaisha, China Shipping Container Lines, Mediterranean Shipping, China Cosco Holdings, Nippon Yusen, Evergreen Group, Orient Overseas (International) , Hanjin Shipping, Yang Ming Marine Transport Corp., Hapag-Lloyd, Zim Integrated Shipping Services and Hyundai Merchant Marine.
Courtesy of IFW
