Container shipping lines in the Transpacific Stabilization Agreement (TSA) Westbound section are looking forward to a stronger 2014 for U.S. beef, pork and poultry exports to Asia. A key concern among carriers as the peak shipping season begins is ensuring an adequate supply of refrigerated and temperature-controlled container equipment.
Increased demand from a growing urban middle class in Asia is reopening markets for U.S. exporters, at a time when refrigerated equipment has migrated to other trades and is more costly to purchase and lease, and when freight rates do not fully cover acquisition, maintenance and operating costs. At the same time, most refrigerated rates for so-called "protein" cargoes are at their lowest levels in more than five years. As a result, TSA-Westbound carriers have recommended a guideline US$700 per 40-foot container (FEU) increase for protein shipments, effective July 1, 2014.
"We're seeing a perfect storm develop in the westbound transpacific refrigerated segment," said TSA-Westbound executive administrator Brian Conrad.
On top of expected organic demand growth in Asia and normal competition for equipment from other seasonal cargoes such as summer fruits, a shortage of refrigerated rail cars in the U.S. is driving inland intermodal demand for containers and generator sets. Premature scrapping of specialty "refrigerated ships is drawing equipment to north-south trades, particularly Central and South America. Sustainable rates are critical to equipment availability in this environment."
Increased demand from a growing urban middle class in Asia is reopening markets for U.S. exporters, at a time when refrigerated equipment has migrated to other trades and is more costly to purchase and lease, and when freight rates do not fully cover acquisition, maintenance and operating costs. At the same time, most refrigerated rates for so-called "protein" cargoes are at their lowest levels in more than five years. As a result, TSA-Westbound carriers have recommended a guideline US$700 per 40-foot container (FEU) increase for protein shipments, effective July 1, 2014.
"We're seeing a perfect storm develop in the westbound transpacific refrigerated segment," said TSA-Westbound executive administrator Brian Conrad.
On top of expected organic demand growth in Asia and normal competition for equipment from other seasonal cargoes such as summer fruits, a shortage of refrigerated rail cars in the U.S. is driving inland intermodal demand for containers and generator sets. Premature scrapping of specialty "refrigerated ships is drawing equipment to north-south trades, particularly Central and South America. Sustainable rates are critical to equipment availability in this environment."
Conrad said TSA-Westbound is announcing the guideline rate increase early to provide adequate notice for protein shippers who typically book export sales 60-90 days in advance.