In an attempt to prevent freight rates from eroding during the slack season, shipping lines that carry U.S. imports from Asia plan to increase rates $400 per 40-foot container on shipments to the West Coast and $600 per FEU to all other destinations, effective Dec. 1.
The Transpacific Stabilization Agreement, a discussion group representing 15 carriers in the eastbound Pacific, also announced a proposed general rate increase of $1,500 per FEU on standard and high-cube refrigerated container shipments from Asia, including Pakistan, Bangladesh and Sri Lanka, to all U.S. destinations, effective Jan. 1.
Brian Conrad, the TSA’s executive administrator, said rates in the eastbound Pacific normally begin to erode after all of the holiday season merchandise has arrived in the U.S., and rates remain depressed into the spring. This sets a low floor from which to start service contract negotiations for the many contracts that take effect on May 1 each year.
Carriers this summer and fall successfully implemented GRIs as the 2012 peak shipping season evolved. “Lines want to be sure that revenue gains made earlier in the year are not prematurely eroded in upcoming contracts,” Conrad said.
As for the hefty rate hike on imports of refrigerated shipments, Conrad said the rate situation for reefer shipments has become so dire that some carriers are scaling back their participation in the U.S. trades and are deploying these costly assets in trade lanes where they can achieve a higher return.
“The message to the trade is that rates are unsustainable and will not support the purchase, lease, operation and maintenance of very sophisticated and costly equipment,” he said.