Trans-Pacific container lines formed a 16-member shipper advisory board to discuss solutions to problems that provoked complaints by exporters of agricultural goods and other commodities.
The Westbound Transpacific Stabilization Agreement, the discussion agreement that represents 10 carriers in the U.S.-to-Asia trade, said the board results from a series of meetings the WTSA has convened with customers during the last two years.
Exporters have complained of difficulty obtaining containers and space on ships in the trans-Pacific. PIERS Global Intelligence Solutions, a Journal of Commerce sister company, reports trans-Pacific imports exceed exports by nearly 2-to-1.
Complicating the imbalance is the stark difference in the types and destinations of import and export containers.
Imports are dominated by consumer goods moving to population centers. Exports include large volumes of agricultural shipments that originate in less-populated areas. The mismatch in container origin and destinations creates annual shortages for exporters during harvest seasons.
Vessel space also has been a problem. Carriers size their trans-Pacific services based on demand for imports, which generally command higher rates than export commodities. And because exports tend to be heavier, outbound ships can’t carry as many boxes.
The WTSA said the newly created panel will discuss long-term shipper-carrier relations and short-term contracting, operational and service issues, many related to the recent global recession, and will explore best practices in areas of day-to-day interaction such as booking, documentation and demand forecasting.
The panel will include exporters of cargo ranging from cotton, grains and meat to machinery and metal scrap, and will comprise beneficial cargo owners and third-party consolidators. The WTSA said subcommittees will address unique trade characteristics of various commodities. Members will serve two-year minimum terms, followed by staggered membership rotations.
“Both sides wanted this initiative,” said WTSA Executive Administrator Brian M. Conrad. “They felt they needed a forum to sit down, candidly exchange ideas, learn more about each other’s businesses, and focus on solutions. This WTSA advisory board has enabled them to do that.”
"This board has started an open and frank dialogue that has the potential to create a long term benefit for the whole shipping community," said board member Mike Ruder, director of logistics for agricultural shipper Calcot. http://www.calcot.com/
The WTSA said the advisory board will discuss things such as how to structure mutual service commitments in contracts; more efficient processes to improve equipment availability; better demand forecasting to help both shippers and carriers plan their space and equipment needs throughout the year; and better coordination in the timing and communication of rate adjustments to accommodate exporters’ forward sales.
The WTSA emphasized that commercial terms will be decided by individual shippers and carriers through negotiations. The WTSA’s antitrust immunity under the shipping act allows carrier members to use the forum to discuss rates and agree on voluntary guidelines but not to set joint rates.
Y.M. Kim, chairman of Hanjin Shipping and of the WTSA, said the shipper advisory committee “will help us more fully understand the commercial realities at play on both sides, and hopefully result in significant benefits to our various industries over the long term."
WTSA members are APL, Cosco, Evergreen, Hanjin, Hapag-Lloyd, Hyundai, “K” Line, NYK, Orient Overseas Container Line and Yangming.
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