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Container freight rates to rise by half?

Asia – Container freight rates on trans-Pacific services from Asia to the USA could rise 50% by May this year if shipping lines succeed in pushing through planned rate increases, according to the South China Morning Post.

Fifteen container shipping lines belonging to the Transpacific Stabilisation Agreement (TSA) have recommended rate increases of US$ 400 per 40-foot container to US west coast ports and US$ 600 per FEU to all other US destinations from April. Carriers like the Tung-family controlled Orient Overseas Container Line and Cosco Container Lines are advocating increases of US$ 800 per FEU for cargo shipped to the west coast and up to US$ 1200 per FEU from Asia to other US cities.

Barclays Bank industrial analyst Jon Windham says container lines have been only partially successful in lifting freight rates as cargo owners have resisted paying the full increases sought. He estimates that cargo demand will rise by 6.3% this year while fleet growth will lag behind at 5.8%, thus helping to ‘buoy’ freight rates. The latter figure contrasts with the 9% growth in container ship capacity forecast by Alphaliner for this year.

TSA’s Executive Administrator Brian Conrad comments: ‘It is essential to carriers’ long-term viability that new contracts include rates that are more closely aligned with current market levels.’

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