Pigs get fat, hogs get slaughtered. Carriers announce ANOTHER rate increase before May 1 renewals

As dawn breaks throughout Asia on March 15th, the shipping community is awaking to a bump in the rates on the eastbound Transpacific.  Announced over a month ago, shippers can expect to see an increase of $300 – $400/FEU.  It’s really no secret that shipping lines are swimming in a pool of red ink that they have filled quite capably themselves.

However, sent off after five, like some kind of Friday night news dump, came word of another increase effective April 15, 2011.

You can read the press release, hours old, on the TSA carriers’ website.  For those not inclined to go there and feel their own stomaches turn, the high(low)lights are the first two paragraphs:

Following on a previously announced March 15 $300 general rate increase (GRI) which they expect to be widely applied, 15 member carriers in the Transpacific Stabilization Agreement (TSA) are recommending a further increase of US$400 per 40-foot container (FEU) effective April 15, 2012, to address rates that remain below baseline levels at that time.

The recommendation reaffirms the resolve of transpacific container lines to improve Asia-U.S. market rates as they move forward in a new round of contract talks with customers. The increase comes just ahead of the previously announced May 1 recommended increase of $500 per FEU for US West Coast cargo and $700 per FEU for all other shipments.

The only calculus that I can figure comes into play is that they figure that if they can get the increased pushed through under people’s existing contracts which may or may not make them susceptible to, and eligible for, tariff-filed rate increases, it eliminates the tough negotiating when those contracts expire on April 30th.

People have accused carriers of being tone deaf and out of touch.  Two brazen attempts to raise rates in the final months of most people’s contracts certainly do raise the table stakes to new levels.