WTSA recommends US-Asia rate hikes of US$50-$100 per FEU from April

2012 03 02

THE Westbound Transpacific Stabilisation Agreement (WTSA) has recommended a new round of dry cargo rate increases by US$50 or $100 per FEU for US-Asia routes.

For shipments of dry cargo, the increase will be US$50 per FEU from Los Angeles, Long Beach and Oakland to Asia. And for all other cargo, the increase will be $100 per FEU for moving via all-water or intermodal service from Pacific northwest ports, from inland US points and from the US east and the Gulf Coast, according to the WTSA statement.

WTSA carriers have also reaffirmed they will fully apply higher bunker fuel surcharges set to take effect on April 1 on top of the adjusted base rates.

Regarding fuel surcharges, WTSA executive director Brian Conrad said its member carriers understand many exporters of raw commodities and semi-finished goods have low margins. But he said carriers must seek a way to reverse losses estimated at more than $5 billion worldwide last year due to slowdown in demand, decline in rates and rise in operating costs, especially the drastic increase of fuel costs.

"Since the beginning of 2012 lines have seen their fuel costs rise steadily, and recently break through the previous record levels set in mid-2008," he said.

"With bunker fuel prices now exceeding $750 per metric ton and bunker accounting for 60 per cent of operating expense on a typical sailing, absorbing any portion of that cost on a sustained basis is not an option."

He added that other challenges confront the carriers include the cargo imbalance favouring eastbound imports from Asia two-to-one, high operating costs in getting empty containers to remote inland loading points, and capacity constraints due to the mix of heavier westbound cargo and empty equipment on a typical sailing.

"All of these factors add to cost and load planning complexity and must be adequately addressed in the rate structure," he said.

But he expressed optimistic views for the outlook: "This is a moment of significant opportunity for US exporters to Asia, and carriers want to ensure that service levels - in terms of schedule reliability, space and equipment availability, accurate and timely documentation, or other requirements - are in place to maximise that opportunity."

WTSA members include APL, Cosco, Evergreen, Hanjin, Hapag-Lloyd, Hyundai Merchant Marine (HMM), "K" Line, NYK, OOCL and Yang Ming.

Source Shipping Gazette - Daily Shipping News

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