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TSA Lines seek further revenue improvement with July 1 GRI
Transpacific container lines say they intend to pursue further revenue improvement that is essential if they are to achieve financial viability and maintain service levels customers expect in the service-intensive Asia-U.S. market.As a result, member carriers in the Transpacific Stabilization Agreement are recommending a further guideline general rate increase for all commodities in the amount of US$400 per 40-foot container (FEU) to the U.S. West Coast and $600 to all other destinations, subject to contract terms, effective July 1, 2013. TSA executive administrator Brian M. Conrad said transpacific freight rates are still not keeping pace with rising costs, and a meaningful increase from current levels is essential to achieve profitability for the benefit of the trade.“The revenue issue is not going away,” Conrad insisted. “We have to make the case repeatedly that short-term, off-season rates cannot be extended for 12 months or longer in contracts, and that new capacity entering the Asia-U.S. market reflects global trends and an investment in productivity to meet future long-term demand. It does not somehow diminish service value and it does not justify moving cargo at unsustainable levels.”Despite modest revenue gains in 2013-14 service contracts and subsequent increases taken by individual carriers in May, Conrad explained, rates remain well target levels needed to maintain profitability and invest for future growth. Conrad said increases to date are partly offset by rising port charges, labor and inland transportation costs in both the U.S. and in Asia, including recent wage increases for East Coast and Hong Kong longshore workers, higher Suez Canal costs and higher rail and truck rates for inland equipment repositioning.
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