The Transpacific Stabilization Agreement – an agreement representing the 15 largest carriers in the U.S. import trade from Asia – announced plans Aug. 18 to increase rates $600 for all 40-foot containers beginning Sept. 1. This rate hike looks to account for heavy traffic on the East Coast, as bookings have exceeded vessel space during the ongoing contract negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union on the West Coast.
This rate increase has been put in place to assist in the rate restoration program outlined by the TSA in January, which aimed to raise rates $300 per Forty-Foot Equivalent Unit each year. Though rates from Shanghai are up an average of $297 per FEU (a 16.2 percent increase) since that time, the additional funds were not able to meet the needs of individual carriers.
Eight General Rates of Increase have been proposed over the course of 2014, each obtaining a realization rate of 50 percent or less. The Aug. 1 GRI was realized at 72 percent, but has lost an average of $89 per FEU since.
In contrast, TSA member Maersk Line reported a groundbreaking 42 percent increase in profits over the second quarter. Though it is difficult to attribute the soaring profits of the world’s largest container line to one route’s raised pricing, the conflicting evidence is compelling. Maersk officials account for the surplus differently.
For your convenience, the 15 carriers that make up the TSA are listed below:
American President Lines, Ltd.
China Shipping Container Lines
COSCO Container Lines, Ltd.
Hanjin Shipping Co., Ltd.
Hyundai Merchant Marine Co., Ltd.
Kawasaki Kisen Kaisha, Ltd (K Line)
Mediterranean Shipping Co.
Nippon Yusen Kaisha (N.Y.K. Line)
Orient Overseas Container Line, Inc.
Yang Ming Transport Corp.
Zim Integrated Shipping Services
Contact your Langham representative with any questions or concerns you may have about how this change may affect your supply chain so that we can continue to evaluate the best cost/service model for your container shipments