Container shipping lines operating from the US to Asia have announced plans to increase freight rates for metal scrap shipments, and to limit the ‘free time’ allowed for delivery of cargo and return of container equipment in China.
Effective February 15, member lines in the Westbound Transpacific Stabilization Agreement (WTSA) intend to raise metal scrap rates to all Asian destinations by US$150 per 40-foot container (FEU) and $120 per 20-foot container (TEU). Also as of February 15, carriers plan to limit free time at Chinese destination points to 12 calendar days, after which equipment detention charges will begin to accrue.
Metal scrap has been the second largest containerized cargo moving from the US to Asia during the past year, with more than 235,000 teus shipped during the first nine months of 2005. Demand for scrap has grown as industrial production throughout Asia, particularly China, has led to scarcity and rising prices for steel, copper, aluminum and other metals.
China adopted especially strict licensing regulations for overseas exporters of metal and plastic scrap in late 2004, aimed at ensuring the content and quality of recyclables, leading in some cases to documentation and inspection delays. In addition, shippers occasionally take advantage of free-time allowances to ship loads of metal scrap before actually lining up a Chinese buyer. WTSA carriers say their plans to limit free-time allowances are an effort to improve equipment availability and recover delay-related costs.