IN A move to ensure greater pricing predictability and service reliability, carrier lines of the Transpacific Stabilization Agreement (TSA) have announced a phased increase in rates and a package of 2016-17 service contract guidelines.
This follows last week's spot rates on the China-US trades falling to the lowest levels of the year, according to the latest readings of the Shanghai Containerised Freight Index.
The TSA announced the intention of lines in the eastbound Pacific to set a minimum rate of US$950 per FEU to the US West Coast, effective December 1. TSA lines are also recommending a minimum of $1,700 per FEU to the US East and Gulf Coasts; and $2,950 per FEU for intermodal moves to key Chicago-area inland point destinations.
From January 1, TSA members are recommending that a general tariff rate increase be filed in the amount of $1,200 per FEU to the West Coast and $1,600 per FEU to the East and Gulf Coasts. Carriers say their objective is to establish more compensatory baseline revenue levels as they head into service contract negotiations, and in advance of the Lunar New Year holiday in Asia that begins in early February, according to a TSA statement.
"Transpacific lines are adjusting to a new normal of larger ships and complex alliances, necessitated by cost and environmental compliance pressures - all in the context of an uncertain global economic environment," explained TSA executive administrator, Brian Conrad.
"Irrespective of cyclical supply-demand issues, it is critical that these global infrastructure providers get their pricing right and fully recover their costs through meaningful, staged rate increases heading into 2016."
TSA has also finalised its 2016-17 service contract programme, which will focus on revenue improvement through both rate and non-rate items. For all 2016-17 service contracts, most of which take effect on May 1, TSA lines are recommending longer-term minimum rates of $1,700 per FEU to the West Coast, and $2,900 per FEU to the East and Gulf Coasts.
In addition, the contract programme will include adjustments to non-rate charges and practices in areas such as absorption of chassis costs; free-time allowances; port and rail demurrage charges; equipment detention and per diem; full recovery of current and projected trucking costs; intermodal pricing; credit policies; and contract boiler plate terms.
"Lines have learned the hard way that small concessions to a customer here and there expand quickly across the trade and add up, over time, to a lot of money left on the table," Mr Conrad said. "Beyond that, addressing these non-rate items will also help to improve equipment velocity and availability, toward a more efficient and robust supply chain."
A final area of concern is that larger line haul vessels making fewer port calls have led to higher feeder service and other transshipment costs in maintaining route coverage throughout Asia. Lines will be closely reviewing their schedules of feeder port add-ons in light of rising costs, and will make specific adjustments to those add-ons as warranted in upcoming contracts.
Member lines of the TSA are: APL, K Line, CSCL, Maersk Line, CMA-CGM, MSC, COSCO, NYK, Evergreen Line, OOCL, Hanjin Shipping, Yangming, Hapag-Lloyd, Zim and Hyundai Merchant Marine.
WORLD SHIPPING
23 November 2015 - 21:13
TSA set minimum rates in the eastbound Pacific trades to counter falling rates
IN A move to ensure greater pricing predictability and service reliability, carrier lines of the Transpacific Stabilization Agreement (TSA) have announced a phased increase in rates and a package of 2016-17 service contract guidelines.
WORLD SHIPPING
23 November 2015 - 21:13
TSA set minimum rates in the eastbound Pacific trades to counter falling rates
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