Ocean carriers push more container rate hikes amid volume declines
Westbound Transpacific Stabilization Agreement pushes freight rate hikes
Dave Hannon -- Purchasing, 11/5/2009 10:32:33 AM
Dry cargo rate increase effective December 1:
$100/FEU $80/TEU
via Southern California ports
$150/FEU $120/TEU via all other
ports and intermodal
Refrigerated cargo rate increase effective January 15, 2010:
$250/FEU $200/TEU
via West Coast ports
$300/FEU $24/TEU via East Coast ports and intermodal
Source: WTSA
As U.S. ports continue to report major declines in container volumes both inbound and outbound, ocean carriers are pushing more rate increases in an effort to stay afloat.
The volume declines at U.S. ports continue, despite news that economic conditions may be picking up. For the year ended Sept. 30, the Port of Long Beach has seen a decline of import and export containers totaling of more than 21%. In Los Angeles, the declines for the first nine month of calendar 2009 have been in the 16% range, weighed down by a steep decline in inbound containers from Asia.
Much of these declines are due to the ongoing slump in U.S. consumer spending. A statement from the Port of Los Angeles says the "High level of unemployment continues to impact consumer spending. Retail sales in September 2009 declined 1.5% from August and decreased 5.7% from September 2008."
Ocean container freight rates have plummeted as a result of that slumping demand, although according to some reports, carriers are gradually having success at pushing rates back up. Just how much have rates dropped? Neil Dekker of Drewry Shipping Consultants told the Los Angeles Times this week that carriers had been able to increase their freight rates for 40-foot containers from less than $900 during the summer to $1,450 in September. But that's still well below the $2,000 they were getting a year ago.
And a weekly analysis of the
container shipping market from Braemar Containers says longer term container
contracts are still at historically low rates "with owners merely pleased to
see their tonnage employed rather than adding to the ever increasing number of
laid up ships." Braemar points out that older ships will struggle most as "the
competition for new and mor
Ocean container rates are on the move.
e economical tonnage more or less erases the demand
for older tonnage on the chartering market."
In an effort to boost those rates further, the Westbound Transpacific Stabilization Agreement carrier group, which represents 10 carriers shipping from the U.S. to Asia, announced last week it is pushing another rate increase of $100/40-foot container and $80 on every 20-foot equivalent (TEU) coming through the Southern California ports, effective December 1, only three months after its last rate hike took effect. On October 1, the WTSA issued a rate increase to reflect higher average bunker fuel prices from June through August.
As reported on Purchasing.com last month, the Transpacific Stabilization Agreement group that represents ocean container carriers shipping from Asia to the U.S., said it is pushing another round of "significant" rate hikes in the $800 range for a FEU.
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