Executive Briefings

Trans-Pacific Carriers Reinstate Floating Fuel Surcharges; Shippers Prepare to

Service contracts between ocean carriers and shippers in the trans-Pacific trades are seeing the restoration of floating bunker fuel surcharges, adjusted monthly in line with global price fluctuations. And that is likely to result in even higher overall rates for shippers. Members of the trans-Pacific discussion agreements in both directions have succeeded in building those fuel surcharges into most contracts-90 percent, in the case of eastbound. According to the Transpacific Stabilization Agreement (TSA), which covers the eastbound trade, the result is "significant increases in the portion of the full, published surcharge level collection." TSA chairman Ronald D. Widdows, whose day job is chief executive officer of APL Ltd., noted that fuel prices are approaching $600 per ton, having more than doubled since the first quarter of 2007. The carriers have managed to bump up the base rate for moving containers as well, with overall revenue increases of between $400 and $600 per 40-foot box. TSA members will be looking for even greater rate increases in 2009, said executive administrator Brian Conrad. Over on the westbound side, where U.S. exporters to Asia stand to benefit from a weak dollar, member lines of the Westbound Transpacific Stabilization Agreement (WTSA) have announced similar floating bunker surcharges and higher overall rates. Expect further increases in that trade, too, WTSA said. According to Conrad, who serves double duty as executive administrator of that group, carriers in many cases are still not recovering their pre-2007 base cost of operations, let alone the recent rise in fuel and other expense.

Visit www.tsa.org and www.wtsa.org

Service contracts between ocean carriers and shippers in the trans-Pacific trades are seeing the restoration of floating bunker fuel surcharges, adjusted monthly in line with global price fluctuations. And that is likely to result in even higher overall rates for shippers. Members of the trans-Pacific discussion agreements in both directions have succeeded in building those fuel surcharges into most contracts-90 percent, in the case of eastbound. According to the Transpacific Stabilization Agreement (TSA), which covers the eastbound trade, the result is "significant increases in the portion of the full, published surcharge level collection." TSA chairman Ronald D. Widdows, whose day job is chief executive officer of APL Ltd., noted that fuel prices are approaching $600 per ton, having more than doubled since the first quarter of 2007. The carriers have managed to bump up the base rate for moving containers as well, with overall revenue increases of between $400 and $600 per 40-foot box. TSA members will be looking for even greater rate increases in 2009, said executive administrator Brian Conrad. Over on the westbound side, where U.S. exporters to Asia stand to benefit from a weak dollar, member lines of the Westbound Transpacific Stabilization Agreement (WTSA) have announced similar floating bunker surcharges and higher overall rates. Expect further increases in that trade, too, WTSA said. According to Conrad, who serves double duty as executive administrator of that group, carriers in many cases are still not recovering their pre-2007 base cost of operations, let alone the recent rise in fuel and other expense.

Visit www.tsa.org and www.wtsa.org