Container ship lines in the Westbound Transpacific Stabilization Agreement have announced rate increases for dry cargoes as they try to stem losses in the U.S.-Asia market.
The WTSA is recommending April 1 increases of $50 per 40-foot-equivalent unit from Los Angeles, Long Beach and Oakland and $100 per FEU for all cargo moving via all-water or intermodal service from Pacific Northwest ports, inland U.S. points or the U.S. East and Gulf coasts. WTSA lines also reaffirmed their commitment to fully apply higher bunker fuel surcharges scheduled to take effect on April 1 on top of the adjusted base rates.
“This is a moment of significant opportunity for U.S. exporters to Asia, and carriers want to ensure that service levels – in terms of schedule reliability, space and equipment availability, accurate and timely documentation, or other requirements – are in place to maximize that opportunity,” said Brian M. Conrad, WTSA executive director.
Conrad noted that import containers outnumber exports two-to-one, and that carriers face high costs in positioning export containers to remote inland loading points as well as capacity constraints due to the mix of heavier westbound cargoes and empty equipment on a typical sailing.
“All of these factors add to cost and load planning complexity and must be adequately addressed in the rate structure,” he said.
Conrad said WTSA lines realize that many exporters of raw commodities and semi-finished goods have low margins. But he said carriers must find a way to reverse losses estimated at more than $5 billion globally last year.
“Since the beginning of 2012 lines have seen their fuel costs rise steadily, and recently break through the previous record levels set in mid-2008,” he said. “With bunker fuel prices now exceeding $750 per metric ton and bunker accounting for 60 percent of operating expense on a typical sailing, absorbing any portion of that cost on a sustained basis is not an option.”
The WTSA is a discussion agreement whose members have antitrust immunity to discuss and agree on voluntary rate guidelines. WTSA members are APL, Cosco, Evergreen, Hanjin, Hapag-Lloyd, Hyundai Merchant Marine, “K” Line, NYK, Orient Overseas Container Line and Yang Ming.