Member box lines in the Transpacific Stabilization Agreement (TSA) are attempting a general rate increase (GRI) on dry cargo transported on the U.S.-Asia trade lane in February next year, as they noted the “unprecedented” slowdown of demand from the Asian market.
The carriers have agreed to levy an across-the-board increase in dry cargo rates effective February 1, 2016.
The recommended GRI is US$100 per 40-foot container (FEU) for cargo moving via the U.S. West Coast, and $200 per FEU for cargo moving via the U.S. East and Gulf Coasts. The GRI will not apply to refrigerated shipments, which are rated separately, said TSA.
The group in deciding to raise freight rates said declining Asian consumer and industrial demand, made worse by a strong dollar, has cut into U.S. export volumes and eroded U.S-Asia freight rates “to the point where some dry cargoes are moving at levels which make them less attractive to carriers than repositioning empty containers.”
Westbound cargo volumes are likely to post negative growth for 2015, as orders have slowed overall, and as sourcing for many goods and raw commodities have shifted to countries with more favorable exchange rates, said TSA executive administrator Brian Conrad.
“The market slowdown has been unprecedented, due primarily to weakening demand,” Conrad said. “Lines don’t envision sustained low rates growing the market, and see little benefit in growing market share at current rate levels. The challenge now is to generate sufficient revenue to maintain service levels and make a reasonable contribution to the round-trip sailing.”
TSA is a research and discussion forum of major container shipping lines operating between Asia and the U.S. TSA’s Westbound Section (TSA-Westbound) focuses on rate and service issues in the backhaul trade from the U.S. to Asia. Member lines include APL, China Shipping Container Lines, CMA-CGM, COSCO Container Lines, Evergreen Line, Hanjin Shipping Co., Hapag-Lloyd, Hyundai Merchant Marine, Kawasaki Kisen Kaisha, Maersk Line, Mediterranean Shipping Co., Nippon Yusen Kaisha, Orient Overseas Container Line, Yangming Marine Transport, and Zim Integrated Shipping Services.
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