AS the annual transpacific contracting season comes to an end, it appears carriers dug in to get higher rates, but costs to shippers evened when low bunker surcharges resulting from low world oil prices were factored in.
The sharp decline in bunker surcharges over the last six months helped offset the rate increases. "When you net that out, you're not getting that much of a pinch," said one shipper.
All-in rates from north Asia to the US west coast were much the same as last year at US$1,600 to $1,650 per FEU, one source told Newark's Journal of Commerce.
For all-water shipments from Asia to the US east coast, bigger importers have negotiated all-in rates including bunker charges of about $2,900 to $2,950 per FEU, up slightly from $2,700 to $2,750 per FEU last year.
The Transpacific Stabilisation Agreement, a quasi-conference of 15 major carriers, set rate floors for members, but the average rates fell well below the TSA's $2,000 per FEU to the west coast and $3,500 to the east coast.
Said VOXX International electronics vice president Pat Moffett: "This is the most painstaking contract negotiation season that I can remember in many, many years."
Although the increases in base rates are hefty, Mr Moffett said they come after six or seven years of annual contracts without any increases.
Bunker has fallen by 50 per cent in the last nine months to less than $300 per tonne from $600 in July 2014.
Carriers found that pushing for higher contract rates, the super-sized vessels flooding the market tended to undermine their negotiating position.
Said Wine and Spirits Shippers Association (WSSA) managing director Alison Leavitt: "The steamship lines would like to dig in their heels and get significant rate increases, but there is new capacity being added."
On the eastbound leg of the transpacific, the WSSA negotiated export contracts for members that have developed new markets for California wine in Hong Kong and Singapore at rates similar to or lower than last year.
Some shippers are mulling skipping the west coast opting for all-water routes to east coast distribution centres.
VOXX, for example, is looking at shifting some of its import volumes away from the west coast. "Now that I've got the rate, I am going to seriously study whether to come in all-water through the Port of New York or Norfolk to reverse the backhaul to Indianapolis from New York," Mr Moffett said.
"There's always something on the west coast. When you don't have the longshoremen thing, you've got the truckers strike in Long Beach," he said.
Carriers are increasing all-water capacity from Asia to east and Gulf Coast ports by 18 per cent to meet increased demand, which will keep rates under pressure, according to London's Drewry Maritime Research.
MARKETS
02 June 2015 - 01:04
Contract rates up over last year, but not if low oil BAFs included
AS the annual transpacific contracting season comes to an end, it appears carriers dug in to get higher rates, but costs to shippers evened when low bunker surcharges resulting from low world oil prices were factored in.
MARKETS
02 June 2015 - 01:04
Contract rates up over last year, but not if low oil BAFs included
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