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YRC Worldwide Inc. Message Board

  • nsthil nsthil Oct 7, 2009 5:20 PM Flag

    Ocean Cargo rates to rise

    Ocean cargo/global logistics: Transpacific carriers try to raise rates
    Patrick Burnson -- Executive Editor -- Logistics Management, 10/7/2009
    SAN FRANCISCO—Carriers comprising the Transpacific Stabilization Agreement are making good on their threat from last July to raise rates and stick to them.

    As reported in LM, shipping lines serving the Asia-U.S. freight market said at that time that average rate levels achieved in the latest round of service contract negotiations were not sustainable over the typical 12-month 2009-10 contract term.

    Since then, the cartel has imposed floating bunker fuel surcharges adjusted on a monthly basis. The organization said that the higher fuel surcharge reflected record-breaking fuel prices. Now, a much larger push to gain revenue is seriously underway.

    And some shippers have admitted that rate pressures in a distressed market have led to some contracts threatening service levels and carrier viability. But that does mean they are entirely sympathetic.

    “Obviously given the reduced volume cargo and a high degree of capacity, prices are at historic lows. However, there are signs of increases in a number of trades,” said Michael Berzon, president of Mar-Log, Inc., a supply chain optimization consultancy specializing in international trade.

    “The TSA still does not understand that shippers are aware that different carriers have different cost structures,” he said. “In addition, within a fleet, different ships have different economics.”

    Berzon, who also serves as chairman of the Washington, DC-based National Industrial Transportation League’s (NITL) ocean cargo committee, told LM that carriers should use a more businesslike approach.

    “Hapag-Lloyd has announced a revenue recovery program in the Trans-Atlantic trades and other lanes,” he noted.

    In a statement, TSA’s 14 members said they have adopted “voluntary guidelines” for the upcoming service contracting season aimed at substantially restoring rates closer to 2008 levels.

    “The guidelines represent an effort not only to reverse a sharp decline in rates during early 2009, but also to fully recover volatile equipment and fuel-related costs,” TSA said. “At the same time, carriers are taking their case for rate restoration to the shippers and regulators well in advance of the 2010 contracting season. Carriers understand they need a different approach, and need to work with shippers more closely to help them understand the challenges facing the industry and the implications for global trade.”

    Specifically, the guidelines call for lines to institute general rate increases of $800 per forty-foot equivalent units (FEUs) for Asia to U.S. West Coast shipments, and $1,000 per FEU for intermodal and U.S. East and Gulf coasts all-water cargo

    The cartel is also recommending a $400 peak season surcharge be implemented from Aug. 1, 2010 “to address higher cargo handling, equipment positioning and contingency planning costs during periods of peak cargo volume.”

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