Transpacific Container Shippers Plan Price Rise

Posted by Joseph Keefe December 18, 2014

A container shipping organisation urged companies on Wednesday to raise Asia-U.S. freight rates by at least $600 per 40-foot container (FEU) from Jan. 15, corresponding to an increase of 26.6 percent from the current level.

The Transpacific Stabilization Agreement (TSA) said the planned increase was part of an ongoing effort by members to reverse a decline in spot rates in the Asia-U.S. freight market.

The organisation also said container shipping companies should reinstate a $400 per FEU peak season surcharge ahead of the Chinese Lunar New Year, with effect from Jan. 15.

Its members include 15 of the world's biggest container shipping lines such as Denmark's Maersk Line, a unit of A.P. Moller-Maersk, privately-owned Switzerland-based Mediterranean Shipping Company (MSC), French privately-held CMA CGM, China's COSCO Shipping, Korea's Hanjin Shipping and others.

"It is critical, after another year of only very slight net gains at best, that carriers shore up rate levels and hold the line on rising costs as we head into a new contracting season and ramp up to meet Lunar New Year seasonal demand," Executive Administrator Brian Conrad said in a statement.

The container shipping industry has been struggling because vessel capacity is outstripping volumes of goods for transport as a result of the global economic downturn.

Over 90 percent of the world's trade is carried by sea, but freight rates plunged to unprofitable levels for most carriers in 2013 as a result of the overcapacity in the market and that trend continued in the first six months of 2014.

Spot freight rates are calculated and published every week by Shanghai Shipping Exchange. Last week, rates for transport of 40-foot containers from Asia to the U.S. West Coast stood at $2,259.

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.