Container shipping lines plying the busy trade route between Asia and the United States plan to raise freight rates and restore fuel surcharges to offset surging oil prices, an industry group said Friday.
The Transpacific Stabilization Agreement (TSA) container carrier group, which represents 14 shipping firms which sail from Asia to U.S. ports, said the changes will be factored into future contracts, noting the price of bunker fuel used by ships had risen 34 percent in the first nine months of this year.
The group plans to raise the rate for shipping a 40-foot container to the U.S. West Coast by $400, and by $600 for shipments to all other U.S. destinations. It also plans to impose a $400 peak season surcharge from June to October 2008.
The TSA also said past contracts that have had fuel surcharges mitigated or folded into base rates will have those charges restored.
"Lines will, of necessity, be pressing the issue of a full, floating bunker charge very seriously in upcoming contract negotiations. Fuel prices are far too volatile, and ocean carriers are far too exposed...to lock in a single price for a year," said TSA chairman and Neptune Orient Lines (NOL) executive Ronald Widdows in the statement. Fuel prices have spiked in recent months, propelled by crude oil prices that have surged to a record of more than $96 per barrel.
"At current price levels, fuel is no longer just another cost component. We're at a point where service levels are at minimum and, for some carriers, financial viability is threatened if we are not able to share these costs more equitably," Widdows said.
TSA said other operating costs including inland rail and truck charges, and port handling fees, are also expected to rise up to 8 percent.
The TSA plans follow similiar moves in recent months by its counterpart covering the America to Asia routes, the Westbound Transpacific Stabilization Agreement (WSTA).
TSA members comprise NOL's American President Lines, CMA CGM, Cosco Container, Evergreen Marine , Hanjin, Hapag Lloyd , Hyundai Merchant Marine , Kawasaki Kisen Kaisha , Mitsui O.S.K. , Nippon Yusen Kaisha , Orient Overseas , Yangming Marine, Mediterranean Shipping and Zim Integrated Shipping. The TSA and its counterparts the WSTA and the Far Eastern Freight Conference which covers Asia-Europe, say they do not set container freight rates as that would constitute an illegal cartel in most countries.
The groups say they look at factors such as economic growth and fuel costs and then recommend price adjustments. Each shipping line has its own rates.
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