DâjÉ vu in the trans-Pacific

DâjÉ vu in the trans-Pacific

Containerized imports from Asia continue to rise briskly, but apparently not enough to require most shippers to pay a large peak-season surcharge to container lines. Importers say some carriers are imposing peak-season surcharges, but they know of none that are taking the full surcharge of $400 per 40-foot container that shipping lines in the eastbound Pacific had previously announced. "It's not even close to that," said Dave Akers, managing director of the Toy Shippers Association.

Last fall the Transpacific Stabilization Agreement, which represents 14 of the largest carriers in the trade lane from Asia to the U.S., announced guidelines for the 2004-05 contracting season, which began in May. The TSA's voluntary guidelines called for a general rate increase of $450 per FEU to the West Coast and $600 per FEU on all-water services to the East Coast and on intermodal rail shipments to inland points.

While negotiations between carriers and individual shippers are confidential, importers reported that most of the general rate increases that took effect on May 1 were $100 to $200 per FEU. Carriers did not dispute those figures.

The TSA also announced a peak-season surcharge of $400 per FEU to run from June 15 to Oct. 31. Several carriers postponed the peak-season surcharge for two weeks on June 15, and for another two weeks on July 1.

Ray Camero, chief executive of Streamline Shippers Association in Vernon, Calif., said this year is turning out to be a repeat of 2003, when carriers kept postponing the peak-season surcharge in two-week increments until late summer, when vessels began to fill. "I predict they'll put off the surcharge at least another two weeks," he said.

It's not a matter of weak imports. "Business is wonderful," Camero said. Pacific Maritime Association statistics show that the ports of Los Angeles and Long Beach, which handle 40 percent of U.S. imports from Asia, enjoyed their second-best month ever in May. The record month was October 2003, at the height of last year's peak season.

Carriers in recent years have regularly announced peak-season surcharges. The charges are intended to cover the cost of keeping excess capacity on hand during slack seasons so it will be available during the busy summer and fall months. Some carriers charter additional vessels or run peak-season-only services to handle the annual surge in back-to-school and holiday shipments.

In practice, carriers' ability to impose peak-season surcharges is determined by the market. When ships are full and importers are desperate to secure equipment and space on vessels, they'll pay surcharges of as much as $400 per FEU.

Last year, and so far this year, carriers have increased eastbound trans-Pacific capacity fast enough to accommodate the growing cargo volumes. Ship capacity increased 10 percent last year and is on track to increase another 10 percent this year.

Shippers also are becoming more sophisticated, shipping early when possible to beat the May 1 general rate increases and June peak-season surcharges. "They're leveling out their shipments throughout the year," Camero said.

Rob Shepard, director of transportation at Reebok, noted that the peak seasons in recent years haven't produced dramatic increases from the slack winter and spring months. As a result, there's less rationale for a peak-season surcharge, he said.

Nevertheless, peak-season surcharges still are announced each year, but their application varies by shipper and carrier. "They're all over the map," Akers said. APL Ltd., for example, said it introduced its peak-season surcharges as planned, although the carrier did not specify if the charges applied to all shippers and at what level they were charged.

Generally, shippers say the largest importers are probably not paying peak-season surcharges this year, while small and medium-sized shippers and cargo consolidators will pay a surcharge, though in most cases not the full $400.

Shippers say a major capacity issue - the shortage of containers that occurred earlier this year because container manufacturers in China could not get enough steel - appears to have subsided. Importers say they are getting most of the containers they request, including 45-foot boxes.

In addition, carriers have not attempted to leverage the delays that are occurring on the West Coast because of a longshore labor shortage in Southern California, intermodal rail problems and trucker discontent. Shippers had feared that carriers would attempt to use the delays, which are running at least a day or two, as a negotiating tactic to impose surcharges.

"Carriers have actually done an excellent job despite the rail, trucker and labor problems," Akers said.