From: David Hickmott [DHickmott@uli-atl.com]
Sent: Thursday, March 25, 2010 5:41 AM
To: David Hickmott
Cc: David Hickmott; David Hickmott
Subject: TSA renews call for rate hikes
Dear Valued Unique Customer,
The below article is from the American Shipper. It reiterates the TSA plan for GRI (General Rate Increase) in May 1, 2010 as announced in October 2009. The increases through surcharges (various names by carriers as EES, ERS, ORCS, PSS, GRI) that were introduced in January and February during tight space situation were an early indication of the GRI. It is quite possible that the carriers will implement the remaining balance of increase in May to achieve the full GRI as outlined in article. At present, the space from various china ports remains tight. It is fully expected that April will be very tight space as many importers will push vendors to ship in April to avoid the further increase in May. Thus, carriers feel that they are in position to maintain existing rate levels. In meeting with carriers during travel to China, the carriers are maintaining their position on achieving sustainable rate levels in 2010. As always, Unique Logistics International will keep our customers informed of any major changes. In addition, we will continue to push for comparable rate levels while securing needed space.
Thank you for
your support of Unique Logistics International. We appreciate and value
your business.
Discover the
"Unique" difference of logistics from Asia to USA trade!
Are
you Ready? ISF Enforcement will begin on January 26, 2010.
Best Regards
David Hickmott - Executive Vice President
ph#404-767-0500 (ext 306)
Mobile# 678-478-6604
Fax# 404-767-3319
TSA renews call for rate hikes
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Member carriers in the
Transpacific Stabilization Agreement said Monday they will continue to pressure
shippers for $800 per 40-foot container rate hikes to the U.S. West Coast
during ongoing service contract negotiations.
The TSA held chief executive officer-level meetings in Taipei last
week and “reiterated their support for the recommended TSA guideline rate
increases,” which also includes a hike of $1,000 per 40-foot container for
cargo moving to U.S. East and Gulf coasts, as well as U.S. interior points, via
all-water or intermodal services.
The lines have taken heat from shippers for their concerted effort
to raise rates this year to what carriers consider sustainable levels. At a
recent container shipping event in Southern California, shippers seemed most
upset with the pace at which carriers were trying to increase rates (not to
mention that shippers were being asked to accept slower transit times and insufficient
active capacity as rates spiked).
But in its message Monday, the TSA said rates are still nowhere
near where they need to be.
“Even if the scheduled increases are fully achieved, that will at
best restore some but not all freight rates to late 2008 levels, which were
viewed at the time as barely compensatory,” TSA said. “Container lines in
aggregate lost, by various estimates, $15 billion to $20 billion in 2009
worldwide as the direct result of falling demand and a corresponding decline in
rates, and liner shipping industry return on capital invested fell to -6.5
percent.”
Rates have improved in recent weeks, though that appears to be
largely a result of increased inventory restocking prior to the Chinese New
Year, and not a lasting economic recovery fueled by consistent growth in
demand. Also, as container lines hammer out contracts with shippers, the
prospect of new capacity hovers over the transpacific trade, threatening to
undermine the way alliances have endeavored to match supply with demand.
TSA said it was forecasting 6 percent to 8 percent cargo growth
for 2010 on the transpacific, but noted that “market conditions remain
uncertain in the Asia/U.S. trade, and that revenues are still well below
sustainable levels.” Transpacific demand fell by more than 15 percent in 2009,
while rates fell by one-third to more than half, depending on commodity and
routing, TSA said.
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Kim |
“Transpacific
container lines took dramatic, emergency steps to cut costs and preserve basic
service levels during a period of unprecedented turmoil,” said Y.M. Kim, TSA
chairman and Hanjin Shipping CEO. “In the process, freight rates fell to
unsustainable levels that were locked into 12-month contracts. The key to
reinvestment and service expansion in the trade is a sustained increase in
cargo demand, accompanied by return to a viable, compensatory rate structure.”
Kim said lines are still losing money on the transpacific and may
seek better returns in other trades.
Meanwhile, the TSA also addressed the issue of space and equipment
shortage for shippers, a topic that’s captured the attention of the Federal
Maritime Commission and members of Congress.
“The chief executives stressed that they are well aware of, and
are committed to addressing, the short-term difficulties that arose in Asia in
the run-up to the Lunar New Year holidays and factory closures,” TSA said. “The
situation of tight space and rolled cargo on some sailings, they indicated, was
due to sustained post-holiday consumer demand in the U.S., and an urgent need
for retail restocking, and has already begun to ease.
“It is expected that specific service issues will be resolved by
individual carrier actions as they redouble their efforts to improve their
services working together as partners with their customers. Longer-term
questions about restoration of assets and services in the Asia-U.S. trade will
be a function of demand trends in coming months, and carriers’ ability to
restore transpacific revenues to stable, compensatory levels.”
TSA Executive Administrator Brian Conrad said the organization
would have a better picture of the industry once carriers lock in contracts
with their customers.
“The market forecast that matters most will be found in the volume
commitments, service features and rate levels negotiated in upcoming
contracts,” Conrad said. “That is what will ultimately drive internal carrier
decision-making in the months ahead.” — Eric Johnson
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