Bill Mongelluzzo, Associate Editor | May 09, 2012 9:54AM EDT
Shipping lines in the eastbound Pacific are counting on a strong peak season this summer and fall to support a proposed peak season surcharge of $600 per 40-foot container.
The Transpacific Stabilization Agreement, a discussion group including 15 of the largest carriers in the trade, announced the proposed surcharge to take effect on June 10. No expiration date was given, although shipments for the holiday shopping season normally begin to tail off in November.
“The lines see a strong outlook for the coming months, with utilization already in the 95 percent range,” said Brian Conrad, executive administrator of the TSA.
Shipping lines that carry U.S. imports from Asia have been pushing rates up steadily this year. Carriers announced rate increases for Jan. 1, March 15 and April 15. Carriers appear to be successful in implementing the rate hikes, at least as they apply to shipments booked by cargo consolidators, known as non-vessel operating common carriers.
According to the Drewry Container Rate Benchmark released each week by the London consultancy firm and published in the Journal of Commerce, the spot market rate on NVO-booked cargo from Hong Kong to Los Angeles dropped as low as $1,400 per 40-foot container unit in December 2011. The rate spiked on Jan. 1 to about $1,800 per-FEU, and increased twice more in the ensuing weeks, reaching $2,337 per-FEU in the week of April 30.
The peak season surcharge announced Tuesday by TSA is also intended to apply to service contract rates negotiated confidentially by retailers and other importers with ocean carriers. The service contract rates normally take effect on May 1 and continue for the ensuing 12 months.
The TSA has no enforcement powers, so the rate increases that it proposes are voluntary. Carriers and their customers negotiate their rates in confidence. Peak season surcharges are likewise negotiated in confidence between the two parties.
Trade economists generally anticipate a strong second half of 2012 and a traditional peak season this year, meaning cargo volumes will build this summer and reach a peak in September or October.
Contact Bill Mongelluzzo at bmongelluzzo@joc.com. Follow him on Twitter @billmongelluzzo.
