September 25, 2012 / 4:48 PM / 6 years ago

Transpacific liners back $800/FEU rate increase

COPENHAGEN (Reuters) - Transpacific container shipping lines have recommended an $800 per 40-foot unit (FEU) hike in freight rates for cargos from Asia to the U.S. west coast from mid-October, a group representing the industry said on Tuesday.

The recommendation was part of guidelines for 2013-14 contracts backed by members of the Transpacific Stabilization Agreement (TSA) ahead of a new round of negotiations with customers, the Oakland, California-based TSA said.

The TSA, which includes the world’s biggest container shipping companies, also recommended a $1,000 per FEU rate increase on containers to the U.S. east coast and Gulf coast through either the Panama Canal or Suez Canal, it said.

The TSA said in a statement the increases should take effect from mid-October with the renewal of contracts or signing of new contracts extending into 2013 or 2014.

It said TSA members had also reiterated the need for charges to offset fuel cost increases fully.

The global shipping industry has been recovering this year from a more than three-year slump, which took many shipping companies into the red and some into bankruptcy.

TSA executive administrator Brian Conrad said in the statement that container lines had faced a steep uphill climb throughout 2012 to reverse revenue losses as steeply discounted rates in key shipping lanes had crept into 12-month contracts.

“Rates negotiated for one route or commodity too easily go viral, spreading to all routes and commodities,” Conrad said.

“That may often be the nature of markets, but it does not necessarily mean those rates are anywhere near economically sustainable for lines carrying the cargo.”

Conrad said the proposed rate increases were badly needed because overall rate levels fell so far earlier in 2012.

He added that the industry’s interim general rate increases in 2012 were only applied as far as individual contract terms or negotiations with customers allowed. “As a result the cumulative revenue effect, while helpful, was less than it appeared.”

Established in 1989, the TSA calls itself a research and discussion forum of major container shipping lines serving the trade from Asia to ports and inland points in the United States.

Its members include Denmark’s Maersk Line (MAERSKb.CO), privately owned and Swiss-based Mediterranean Shipping Company (MSC), France’s privately held CMA CGM, China’s COSCO (601919.SS) (1919.HK), Korea’s Hanjin Shipping (000700.KS), Taiwan’s Evergreen Marine (2603.TW) and several others.

Reporting by John Acher; Editing by Catherine Evans

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