Key priorities are to recover CFS and fuel costs, attract refrigerated equipment back to the market.
Member shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) have adopted a voluntary rate program for shipments of US meat and poultry to Asia, as the bulk of service contracts in that market segment come up for renewal.
Carriers say they intend to raise freight rates for frozen and chilled beef and pork, and for frozen poultry, by US$400 per 40-foot container with proportionate increases for other equipment sizes, effective July 1, 2006. The higher rates are needed, WTSA says, as pork shipments continue to post strong growth; as Korean and Chinese markets for US beef have reopened; and as prospects are good for resolving outstanding concerns related to mad cow disease in the important Japan market.
‘Tens of thousands of refrigerated containers were redeployed to other trade lanes during the three years that US beef and poultry were banned in parts of Asia during the mad cow and avian flu scares,’ said WTSA executive director Albert A. Pierce. ‘Those trade lanes command very favorable rates for refrigerated commodities and it will take higher rates to justify bringing that equipment back into the Pacific.’
Pierce added that WTSA lines have not raised some meat and poultry rates since 2003, when the bans in Asia were first introduced. During the past three years, he noted, costs associated with managing, positioning and operating refrigerated equipment ’ particularly temperature-controlled containers for moving chilled cargo ’ have increased steadily.
Cost recovery is a key factor in the WTSA rate program. Member lines say they will change the way they construct rates for container loads of meat and poultry assembled at inland and harbor container freight stations, rather than at the customer’s loading facility. Such shipments will be charged the base container yard (CY) rate plus the full CFS charge.
In addition, carriers noted the sharp rise in fuel costs during the past year since existing contracts were originally negotiated, and reaffirmed their commitment to maximizing fuel cost recovery through bunker and inland fuel surcharges.
WTSA is a voluntary discussion and research forum of 11 major container shipping lines serving the trade from ports and inland points in the U.S to destinations throughout Asia. More information on WTSA can be found at www.wtsacarriers.org.