Executive Briefings

Trans-Pacific Carriers Forecast Growth, Defend Rate Increases

Member lines of the Transpacific Stabilization Agreement (www.tsacarriers.org) emerged from CEO-level meetings in Taipei this week with a forecast of 6 percent to 8 percent cargo growth for the Asia-U.S. freight market this year. At the same time, the group defended its "emergency" rate increases of recent weeks, as well as the substantial boosts that its members hope to achieve in the next round of service contracts. In a statement following the Taipei meetings, TSA claimed that container lines' losses worldwide amounted to between $15bn and $20bn in 2009. In the trans-Pacific trade, demand for ship space plunged by more than 15 percent. In response, the group recommended an "emergency revenue charge" of $400 per forty-foot container (FEU), effective on Jan. 15 of this year. TSA called that action a "stopgap" measure to obtain short-term relief for struggling carriers. Now its members are seeking rate increases of $800 per FEU for cargo moving to the U.S. West Coast, and $1,000 per FEU for shipments to the U.S. East and Gulf Coasts and U.S. interior points. Most of the increases would take effect on May 1, the traditional start date of year-long service contracts in the trade. TSA said the boosts, assuming they fully take hold, would "at best restore some but not all freight rates to late 2008 levels, which were viewed at the time as barely compensatory." The group also responded to shippers' complaints about rejected containers due to constrained capacity in the runup to the Chinese New Year. The situation "was due to sustained post-holiday consumer demand in the U.S., and an urgent need for retail re-stocking, and has already begun to ease," TSA said.

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Member lines of the Transpacific Stabilization Agreement (www.tsacarriers.org) emerged from CEO-level meetings in Taipei this week with a forecast of 6 percent to 8 percent cargo growth for the Asia-U.S. freight market this year. At the same time, the group defended its "emergency" rate increases of recent weeks, as well as the substantial boosts that its members hope to achieve in the next round of service contracts. In a statement following the Taipei meetings, TSA claimed that container lines' losses worldwide amounted to between $15bn and $20bn in 2009. In the trans-Pacific trade, demand for ship space plunged by more than 15 percent. In response, the group recommended an "emergency revenue charge" of $400 per forty-foot container (FEU), effective on Jan. 15 of this year. TSA called that action a "stopgap" measure to obtain short-term relief for struggling carriers. Now its members are seeking rate increases of $800 per FEU for cargo moving to the U.S. West Coast, and $1,000 per FEU for shipments to the U.S. East and Gulf Coasts and U.S. interior points. Most of the increases would take effect on May 1, the traditional start date of year-long service contracts in the trade. TSA said the boosts, assuming they fully take hold, would "at best restore some but not all freight rates to late 2008 levels, which were viewed at the time as barely compensatory." The group also responded to shippers' complaints about rejected containers due to constrained capacity in the runup to the Chinese New Year. The situation "was due to sustained post-holiday consumer demand in the U.S., and an urgent need for retail re-stocking, and has already begun to ease," TSA said.

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