Transpacific Stablisation Agreement carriers call off rate war

OVERCAPACITY and slackening demand has prompted 13 members of the 14-member Transpacific Stabilisation Agreement (TSA) members to raise rates, fuel levies and increase peak season surcharges to ease pressure on those companies using the Asia-US routes.

The rate increase per FEU of US$500 will apply from August 10 until April and will be considered a voluntary agreement, said TSA in a statement agreed by giants NOL subsidiary APL, China Cosco Holdings and 12 others, reported Seatrade Asia.

A mentality of "panic" is likely to damage container lines who were driven to cut rates in locked in contracts to match spot rates on the eastbound transpacific trade lane said Lee Won Woo, chief executive of TSA member line Hanjin Shipping's container unit.

"If current rates are extended over 12 months, it is likely that the trade will encounter significant financial challenges," he added.

Current spot rates for Hong Kong to Los Angeles are as low as $900 but unlikely to stick and are not indicative of a return to demand, according to UK-based Drewry Shipping Consultants on the rates drop of 56 per cent year-on-year.

With demand down by 20 per cent, Asia container lines are consolidating with NOL cutting 1,000 jobs after its highest quarterly loss in seven years, Yang Ming delaying 14 ship orders, Evergreen laying up 31 vessels, and cancelling routes while China Shipping doubled rates.

APL, China Shipping, CMA-CGM, Cosco Container, Evergreen, Hanjin, Hapag-Lloyd, Hyundai Merchant Marine, "K" Line, MSC, NYK, OOCL, Yang Ming and Zim are members of the Transpacific Stabilisation Agreement.

(Source: www.schednet.com)