Container Lines Plan Pacific Freight Rate Rise

Posted by Eric Haun
Wednesday, April 30, 2014
Photo courtesy CMA CGM

Container shipping lines have agreed to raise Asia-U.S. freight rates by $300 per 40-foot container (FEU) to west coast ports of the U.S. and by $400 to all other ports in the U.S from May 15.

The increase was agreed by companies in the Transpacific Stabilization Agreement (TSA) which also adopted a $400 per FEU peak season surcharge effective June 15, the TSA said in a statement.

The TSA groups 15 of the world's biggest container shipping lines, including Denmark's Maersk Line, a unit of A.P. Moller-Maersk, privately owned Swiss-based Mediterranean Shipping Company (MSC), French privately held CMA CGM, China's COSCO and South Korea's Hanjin Shipping .

The container shipping industry was hit hard by the global economic downturn since 2008 and only a few lines made a profit in 2013 due to supply outstripping demand.

Spot freight rates are calculated and published every week by Shanghai Shipping Exchange and the surcharges added to that.

Last week rates for transport from Asia to the U.S. West Coast stood at $3,844 per 40-foot container and $6,656 to ports on the east coast.

"Carriers continue to play catch-up on rates, which have been effectively stagnant since 2011," TSA Executive Administrator Brian Conrad said.

Transpacific container lines are experiencing a surge in eastbound bookings that began in January and is expected to continue into the second half of 2014, with vessel utilization in the mid-90 percent range via the West Coast and in the high-90 percent to full range to the East and Gulf Coasts, the TSA says.

Founded in 1989, the TSA calls itself a "research and discussion forum of major container shipping lines" serving the trade from Asia to the United States.

Liner shipping was previously organised in similar groups called "liner conferences" which met to discuss market conditions, freight rates and other common concerns.

But the European Union decided in 2006 to ban the practice as against competition rules and the ban took effect in 2008.

(Reporting by Ole Mikkelsen; Editing by Robin Pomeroy)

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