Cosco Container Lines plans to insist on floating bunker surcharges in next year's trans-Pacific contract negotiations, said Howard Finkel, the carrier's executive vice president of trade.
Finkel said soaring fuel costs, coupled with higher prices for intermodal rail service, have most carriers seeing red, despite a strong market and a balanced supply-and-demand scenario.
He said Cosco is determined to break that pattern in next year's negotiations. He said Cosco cannot accept non-compensatory rate levels, along with rates that don't allow for a floating bunker surcharge. A damaging trend in the industry is that larger shippers ask for deeply discounted rates that include bunker.
He said it has become common for trans-Pacific shippers to request contract terms that saddle carriers with the risk of rising bunker costs. He said carriers cannot continue to operate under that arrangement.
He said the theory that small and medium-sized shippers will make up for the lack of bunker and revenue is an extremely flawed one.
He said Cosco will be reasonable and negotiate with customers in good faith, but at the end of the day, but insisted that the company has to turn a profit.
He said shippers demand excellence in their carriers along with the latest technology to make sure their cargo arrives safely, expeditiously and can be tracked at all times and companies cannot afford to keep up with those kinds of sophisticated demands if they are operating in the red.
Cosco is starting weekly service this month from Asia to Prince Rupert, British Columbia, a new container port that will be devoted exclusively to intermodal shipments via Canadian National Railway.
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