[ Transpacific Shipping Lines Optimistic on Cargo Grow... ]

Transpacific Shipping Lines Optimistic on Cargo Growth, Rates for the
Year 2000

Member shipping lines in the Transpacific Stabilization Agreement(TSA
), a carrier discussion forum, indicated that they plan to increase cu
rrent rates across the board by US$400 per 40-foot container, effectiv
e May 1,200, and implement a US$300 per 40-foot container peak season
surcharge to cover added operating costs during the busiest shipping m
onths,from July 1 through October 31, 2000. The rate increase and surc
harge will apply to both tariff and service contract cargo.
Carriers are forecasting 8 percent cargo growth in 2000, based on the
most recent available economic data. That forecast comes on top of th
e 10-15 percent growth expected for all of 1999. Altogether, this sust
ained growth is expected to ansorb much of the additional vessel space
announced by new and established Pacific cervices during 1999-2000, l
eaving ships operating at very high capacity utilization levels during
most of next year.
Based on their review of the market, the individual TSA lines believe
that the year 2000 increase and surcharge will be supported by cargo
demand, available vessel space and other market factors. They addition
ally stressed the importance of moving toward a more realistic pricing
structure in the Pacific -- one that more accurately reflects carrier
s’ overall costs, and the growing demand for premium, highly customiz
ed transportation service commitments during shortened peak periods.
Lines say recent labor actions will increase cargo handling and short
haul trucking charges at North Amerucan ports. They also anticipate hi
gher vessel charter and feeder service costs. Equipment imbalances and
repositioning costs continue to affect operations despite recent slig
ht improvement in U.S. exports to Asia. Finally, uncertainty over the
U.S. harbor maintenance fee, Y2K compliance and other costs make it i
mperative for carriers to plan for contingencies.
Rate initiatives endorsed by TSA lines are voluntary and non-binding
guidelines. Each member has the flexibility to act in its own interest
s in implementing rate adjustments and surcharges, whether through its
published tariff or under confidential service contracts.
TSA is a discussion forum and policy setting group of 14 ocean and in
termodal transportation companies that serve the trade from Asia, incl
uding the Indian Subcontinent, to the U.S. Members include: American P
resident Lines, Ltd.; COSCO Container Lines, Ltd.; Evergreen Marine Co
rp. (Taiwan), Ltd.; Hanjin shipping Co., Ltd.; Hapag Lloyd Container L
inie GmbH; Hyundai Merchant Marine Co., Ltd.; Kawasaki Kisen Kaisha, L
td.(K Line); Mitsui O.S.K. Lines, Ltd.; A.P. Moller-Maersk Line; P&O N
edlloyd Ltd./B.V.; Nippon Yusen Kaisha(N.Y.K. Lines); Orient Overseas
Container Lines, Inc.; Sea-Land Service, Inc.; and Yangming Marine Tra
nsport Corp.