Reminiscent of 2012 when carriers tried to impose incremental increases in advance of the annual May 1st contract renewal deadline, the TSA has announced a planned GRI for April 1st of $400/FEU to the West Coast and $600/FEU to all other destinations in order to preserve the rate recovery they have made over the past several months. They’re also planning a shakeup in how they manage east and westbound capacity as well.
While quiet now for the Chinese Lunar New Year (it’s the year of the snake this year), the TSA sees continued strength in liftings. Quoting Brian Conrad, their Executive Administrator: “The week-long Lunar New Year factory closures in Asia tend to pull forward spring shipments, especially among retail customers. This translates into slowing cargo demand after the holidays, and is one of many such inflection points that can erode revenue throughout the year. Carriers are committed to keeping market rates stable over the next 6 to 8 weeks, as the contracting season ramps up.”
The new twist to the news about the TSA and their Federal Maritime Commission filing to try to merge their activities with the Westbound Transpacific Stabilization Agreement (the WTSA for short). From a carrier’s perspective, there are countless benefits such as managing capacity and schedules on both legs of roundtrip sailings. There are eight members of the WTSA and fifteen members of the eastbound agreement (the eight westbound members are all members of the eastbound agreement).
From a shipper’s perspective, they’re far less enthused. In a letter to FMC Chairman Lidinsky, the NIT League expresses grave concerns because the carriers “…control and operate over 90 percent of the available capacity in the east and westbound Pacific.” They are also concerned that disbanding the WTSA will lead to the termination of a shipper’s advisory board formed in early 2010, “when seasonal and geographic imbalances resulted in alarming service failures that proved harmful to U.S. exporters.” The NIT League has a front row seat on what diminished competition in short-line and trans-continental railroads has meant for their members and want to make sure that their members are not disadvantaged in a consolidated ocean freight environment as well.