Transpacific Shipping Lines Adopt Minimum Rates for 2009-10 Contracts

(Transport Intelligence)

Container shipping lines belonging to the Transpacific Stabilization Agreement (TSA) are recommending what they describe as “an unprecedented schedule” of minimum base freight rates from Asia to the U.S. for their upcoming service contracts, in an effort to stabilise revenues and services.

Confirming that development in a recently-published statement, the TSA claimed that establishing a floor on rates, in the light of a recent flurry of reductions, would “likely decide whether some lines continue to operate in the trade”.

The TSA stated that despite initiatives previously announced by that body, efforts to curtail rate volatility during the traditional off-peak period had been largely unsuccessful, as carriers struggled to respond to substantially lower cargo demand and the resulting overcapacity.

“Senior executives with TSA carriers now must come to terms with a stark set of choices: set their pricing at minimally sustainable levels, or see massive losses in 2009-10 that will not only threaten their viability but also damage the service integrity in the trade.” Read more here.