Asia-U.S. container lines continue to resist downward pressure on rates in the early days of their 2013-14 contract negotiations.
To establish a more compensatory rate baseline for contracts that will be in effect through mid-2014, member carriers in the Transpacific Stabilization Agreement (TSA) are recommending a dry cargo general rate increase (GRI) of US$400 per 40-foot container (FEU) to the U.S. West Coast, and US$600 per FEU for all other destinations, effective December 1, 2012. TSA lines pointed to recent flat or declining revenue growth in some commodity categories, as winter season demand weakens and existing contracts expire, making further revenue improvement critical.
"Even though contracts run 12 months or more, rates ebb and flow throughout the year depending on contract timing and structure, as well as cargo seasonality"said TSA executive administrator Brian M. Conrad. "This is especially true in the fourth quarter, as peak season traffic begins to ease, and more so this year, as U.S. holiday retail shipments were moved forward amid labor uncertainty. Lines want to be sure that revenue gains made earlier in the year are not prematurely eroded in upcoming contracts."
In addition, TSA carriers adopted a guideline January 1, 2013 GRI on refrigerated cargo, from all Asian origins-including Pakistan, Bangladesh and Sri Lanka-to all U.S. destinations, of US$1,500 per standard and high-cube FEU. The increase is consistent with individual actions taken by a number of carriers in the transpacific and other markets as rates have declined while cargo handling and equipment costs continue to rise. "The revenue situation for refrigerated cargo is so dire at this point that some lines are increasingly scaling back participation in the market because moving rates are below cost,"Conrad explained. "This increase follows years of gradual rate deterioration; the message to the trade is that rates are unsustainable and will not support the purchase, lease, operation and maintenance of very sophisticated and costly equipment."
