Container shipping lines participating in the Transpacific Stabilisation Agreement (TSA) have announced a major structural shift to floating bunker fuel surcharges in 2008-09 for Asia-US freight contracts.
A TSA statement said that gains in freight rates have been achieved, but further increases will be required in 2009 to cope with rising landside operating costs.
The announcement comes as transpacific container lines say they have taken an important step forward in the current round of service contract negotiations with US importers. Foremost among these is restoration of floating bunker fuel surcharges that are adjusted monthly over the contract term to reflect world fuel price fluctuations, and an increase in the dollar amount of published fuel surcharges that will actually be collected in contracts.
Member shipping lines in the TSA are reporting that an average 70 per cent of new contracts have been concluded relative to May 2007. Well over 90 per cent of signed contracts for the coming year contain provisions for a floating bunker surcharge, as well as significant increases in the portion of the full, published surcharge level collected.
"Given the trajectory of fuel prices, which are approaching US$600 per ton and have now more than doubled since the first quarter of 2007, the need for structural change in fuel recovery in the transpacific market was critical," said TSA chairman Ronald Widdows, also CEO of Singapore-based container line APL.
"We appreciate the understanding of the shipping community that fuel costs are a real and present threat to lines' ongoing ability to adequately serve this corridor, through which most US trade flows," he added.
Most transpacific contracts included increases to base freight rates, with the strongest gains in the intermodal and US east coast all-water segments, he noted, but these gains represent only a portion of the levels of $400 per FEU to the west coast and $600 per FEU for all other shipments that TSA member lines sought to achieve.
Overall revenue per container increases appear to be settling in the $400-$600 range, inclusive of the shift to the floating bunker structure but before factoring in peak season and other non-fuel ancillary charges.
"The TSA guideline increases reflect higher anticipated intermodal, equipment management and cargo handling costs during 2008, so carriers will be seeking to achieve further base rate improvement next year," said TSA executive administrator Brian Conrad.
Demand for east coast all-water services grew by 10 per cent for the trade and more than 15 per cent for TSA lines in 2007, putting pressure on finite space and equipment. On the west coast, TSA said in a release "significant new costs are on the horizon, including truck replacement, green terminal, transportation worker identification credential (TWIC), expanded off-peak programmes, per-container port infrastructure fees and other charges, some of which will be passed through to ocean carriers.
TSA members are: APL, "K" Line, CSCL, MSC, CMA CGM, MOL, Coscon, NYK Line, Evergreen, OOCL, Hanjin Shipping, Yangming Marine Transport Corp., Hapag-Lloyd, Zim and HMM.
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