PACIFIC GROUP HIKES CURRENCY SURCHARGE TO 50 PERCENT ON SHIPMENTS BOUND FOR JAPAN

PACIFIC GROUP HIKES CURRENCY SURCHARGE TO 50 PERCENT ON SHIPMENTS BOUND FOR JAPAN

The outbound Pacific shipping conference is boosting its currency surcharge to Japanese destinations by six percentage points to one-half of the freight bill, effective Oct. 1.

The conference, called the Transpacific Westbound Rate Agreement, also is raising the currency surcharge for Singapore-bound cargoes. The rate-making group, however, is lowering its fuel surcharges.Effective Oct. 1, the conference's "currency adjustment factor" for cargoes going to Japan will be set at 50 percent instead of 44 percent. The conference, made up of nine members, said the increase was necessary because of the appreciation of the Japanese yen relative to the U.S. dollar. Since carriers collect freight charges in dollars but pay their Japanese operating expenses in yen, the appreciation of the yen ends up costing carriers more U.S. dollars.

"We obviously have concerns when that much is wrapped up in the surcharge," said Ronald Gottshall, the retiring managing director of the TWRA. "But it was designed to handle volatile situations and dramatic swings (in the exchange rate) and that is the situation in Japan."

Shippers, however, have been critical of the surcharges, saying they are a means of garnering extra revenue on the pretense of currency problems.

"I think it's all smoke and mirrors," said Jil Morley, transportation administrator for Blue Diamond Growers, a Sacramento, Calif., almond producer and exporter. "The steamship lines trot out a formula to justify the entire practice, but I think it's questionable."

The currency surcharge for freight headed to Singapore will be increased, to 11 percent from 10 percent, also because of an increase in the value of the Singapore dollar vs. the U.S. dollar.

Also beginning Oct. 1, the conference's fuel surcharge, which is designed to cover swings in fuel prices, will be lowered to $40 a 40-foot (FEU) or 45- foot container, $32 a 20-foot container (TEU), $20 a vehicle, and $2 a metric ton. Previously, the charges were $60 a FEU, $48 a TEU, $30 a vehicle and $3 a metric ton.

TWRA carriers deploy a total of 124 vessels in the Pacific trade, offering more than 2,400 sailings a year. Members are American President Lines, Hapag-Lloyd AG, Kawasaki Kisen Kaisha ("K" Line), Maersk Line, Mitsui O.S.K. Lines, Neptune Orient Lines, Nippon Yusen Kaisha (NYK Line), Orient Overseas Container Line and Sea-Land Service Inc.