Are Transpacific Container Rates Set to Rise in 2013?

As early as September of 2011, members of the Transpacific Stabilization Agreement (TSA) confirmed their dedication to reversing 2011 and 2012 losses. How? According to the TSA, raising the baseline for dry and reefer cargo freight rates as they head into a new round of 2013-14 contract negotiations with customers is essential, as shipping lines have experienced declining sales growth due to slow demand and the growing surplus of new, larger vessels.

Shanghai Container Freight Index

Courtesy of Shanghai Container Freight Index (SCFI), via PIERS.com

As of January 15, 2013, member lines in the Transpacific Stabilization Agreement have begun recommending rate increases of $600 per 40-foot container (FEU) to the U.S. West Coast and inland coastal state destinations, and $800 per FEU to all other destinations. Yet SCFI data for the week of January 18th shows rates have only increased modestly with rates to the U.S. West Coast up $179 per FEU and rates to the East Coast up $145 per FEU.

The current climate of the industry includes freight rate increase, restrained demand and volatility – all which will be discussed at the 2013 TPM Conference, the largest shipping and logistics event in North America.

“By the time TPM in early March comes around, the results of carriers’ early 2013 efforts to boost spot rates in advance of service contract negotiations will be better understood. Carriers are aiming to reverse the negative trend of eastbound rates in the second half of 2012 but will be doing so against a backdrop of global overcapacity but also rising layups and scrappings. This combustible mix will make for an interesting Market Outlook session and indeed an interesting event this year,” said Peter Tirschwell, Senior Vice President of UBM Global Trade.

Keep abreast of current spot rate changes by visiting PIERS for up-to-date Shanghai Container Freight Index rates for the U.S. West Coast, U.S. East Coast, to Europe and to the Mediterranean.

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