PACIFIC CARRIERS OFFER DISCOUNTS FOR SLOW SEASON RATE ACTION TAKEN TO COMPETE WITH INDEPENDENTS

PACIFIC CARRIERS OFFER DISCOUNTS FOR SLOW SEASON RATE ACTION TAKEN TO COMPETE WITH INDEPENDENTS

Seeking to pre-empt a rate attack by independent carriers later this year, carriers belonging to the rate-setting conference in the Pacific are offering special discounts to shippers willing to commit cargo to them during the post- Christmas slack shipping season.

Members of the Asia North America Eastbound Rate Agreement approved a ''slack-season discount program" at a meeting last week.The program reflects growing concern by the 10 Anera carriers that once the holiday importing season is over sometime this fall, independent lines, with rates typically lower by 5 percent to 10 percent, will be in a position to capture large volumes of slack-season cargo that normally would move on Anera vessels.

''There is a concern that cargo levels as far as Anera is concerned are going do drop off during the slack season," said Brian Conrad, Anera managing director. "With all the new (independent) tonnage, there's a feeling that Anera will notice the slack more than we have in past years."

The Anera carriers are already feeling the heat from independent lines. Several of these discount carriers have added larger vessels, heightening Anera fears about rates and volumes during the remainder of the year.

Carrier executives said that in the period leading up to the May 1 deadline for signing annual shipping contracts, called service contracts, many shippers shifted cargo to independent lines. The diversion was an act of protest over the large rate increases that Anera carriers proposed to write into the 500 contracts it signs with shippers each year.

American President Lines, an Anera carrier, reported that its April-June import cargo volumes dropped off 11 percent "primarily due to increased competition from non-conference carriers," John Lillie, APL chairman and chief executive said in a recent statement.

Other Anera carriers suffered anywhere from a 5 percent to 10 percent cargo loss during that period, carrier executives said.

That experience has the Anera group, which typically controls about 60 percent of the cargo imported over the Pacific, fretting about how rates may be affected.

The discount program is being offered "solely for them to keep their members from going IA in the slack season, plus I do believe they lost a lot of containers with other companies going to the non-Anera carriers," said Mike Donahue, manager of corporate transportation for Converse Inc. in North Reading, Mass.

IA stands for independent action, the legal right that conference carriers have to undercut individual conference rates. Anera carriers themselves have noted the potential for rate erosion later in the year.

''We expect increased competitive pressure on shipping rates in our U.S. import market," Mr. Lillie said.

Carrier executives said the Anera group is particularly concerned about the slack-season cargo that runs over and beyond what shippers have committed to move under service contracts.

Once shippers have fulfilled their contracted cargo commitments to either the Anera carriers or individual independent lines, they are free to ship with whomever they choose. The slack-season incentive program is designed to capture as much of that discretionary cargo as possible.

Many of Anera's largest customers, who import items such as toys, clothing and footwear from China and other Asian countries, are being offered a $60 discount for each 40-foot container shipped between December and April 30.

Other customers are being offered a $40 discount per 40-foot container, with an additional $20 discount for committing additional cargo to Anera during the December-April period. The program does not apply to certain products such as patio furniture, lounge chairs and computers. Letters to shippers explaining the program were sent earlier this week.

Carriers and shippers both say it is too early to tell how the program will play out, although the program will certainly eat into the $200 per 40- foot container average rate increase the Anera carriers won in April's contract negotiations.

Shippers say the independent lines are also offering slack-season discounts, which could undermine the Anera program. Moreover, for many large moving commodities such as toys, slack season means what it says: less cargo.

''We are moving some product during that time, but not a tremendous volume," said Andrew Rosener, commercial manager for Hasbro Inc. in Pawtucket, R.I.