Asia-U.S. Ocean Container Freight Rates to Climb

Saying that forecasts indicate a steep rise in operating costs, TSA members have now finalized their adjustments to freight rates and charges for their 2007-2008 contracts. Proposed increases are $300 per 40-foot container (FEU) for cargo moving to U.S. West Coast ports and within what’s known as the “Group 4” of West Coast states. TSA will bump up rates for shipments to inland point and mini-land bridge shipments by $650 per FEU and $500 per FEU for cargo moving to U.S. East Coast and Gulf Coast ports by all-water routes via either the Suez or Panama Canals.

TSA points to continuing import volumes at U.S. ports and a growing imbalance of cargo and equipment as reasons for the increases. It cites U.S. containerized imports from Asia growing by 13.2% year over year for the first six months of 2006, to 3.06 million FEU. During the same period, U.S. containerized exports to Asia grew only 6.5% to 1.12 million FEU.

The TSA is fully cognizant of some predictions that there will be over capacity. Its executive director, Albert A. Pierce, says that is likely not the case, even though, “newer, larger ships are a fact of life. But they replace ships that are redeployed to other trades. Most U.S. ports can’t handle them fully loaded due to channel draft, terminal or rail constraints.”

TSA has extended its current peak season surcharge to February 28, 2007, noting that ships are near full, and because of the imbalances mentioned above. However, the Agreement will adjust the surcharge to $400 per FEU for all U.S. coasts on December 1, 2006.

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