The 14-member Transpacific Stabilisation Agreement (TSA) represents the leading transpacific container lines including APL, China Shipping Container, CMA-CGM, Cosco Container Lines, Evergreen, Hanjin Shipping and Hapag-Lloyd. So, yes, China is heavily involved.
These main container shipping lines serving the transpacific route between Asia and the United States said through the TSA that there is a plan to raise rates and seek renegotiation of recent contracts in a move to avoid suffering what they say would be substantial losses.
TSA said the shipping lines had agreed to a "voluntary guideline" for a sharp increase of $500 for carrying a standard 40-foot container box, which would represent a 50% cent rise on current rates. The agreement may say it is a voluntary guideline. A harsher judgement would be that this is price fixing.
In addition, the lines plan to raise fuel levies and may add peak season surcharges to take advantage of an expected rise in cargo shipments during July and August as the United States stocks up inventories for the school and holiday seasons towards the end of the year.
The group, or if you wish, cartel, said, "In certain cases, it will be necessary for lines to engage with shippers in a renegotiation of contracts that do not provide for some of the interim rate adjustment."
How much notice will be taken of all of this is open for debate.
The TSA claimed that drastic action was needed to prevent "revenue deterioration" that "would eventually lead to fewer lines operating at reduced service levels". Possibly true. But shipping lines tend not to be overly-concerned with guidelines if it is a question of getting an order.
The Financial Times reported that W.W. Lee, chief executive for South Korea’s Hanjin Shipping, blamed the falling rates on "panic" and said the "damage is serious", with the result that "If current rates are extended out over 12 months, it is likely that the trade will encounter significant financial challenges". Which is another way of saying that it will lose serious money.
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