U.S.-Asia container lines to accelerate fuel cost recovery; westbound traffic 'must pay own way', says company official

Liling Tan

Liling Tan

May 26, 2008 – Westbound Transpacific Stabilization Agreement (WTSA)

OAKLAND, Calif. , May 26, 2008 (press release) – Member shipping lines in the Westbound Transpacific Stabilization Agreement (WTSA) have stepped up efforts to reach their 2008 goal of achieving full, floating bunker fuel surcharges across the board. 

As previously announced, WTSA lines will raise their bunker surcharges, effective July 1, 2008, to $600 per 40-foot container (FEU), or the full formula level in effect at the time, whichever is lower. As of October 1, surcharge levels for all tariff and contract cargo will be increased to the full, floating bunker surcharge in effect at that time, and will then be adjusted monthly to float with fuel price fluctuations under the WTSA calculation formula.

“With the inbound Asia-U.S. trade flat, and with fuel, inland intermodal and other costs rising, westbound traffic must truly begin to pay its own way,” explained Brian M. Conrad, WTSA executive administrator. 

WTSA carriers have gotten modest, incremental increases in freight rates during the past two years, Conrad said, but those have not kept pace with inland transport and equipment-related costs. Renewal of long-term intermodal rail contracts has meant 25-35% rate increases, for loaded and repositioned empty containers. Trucking rates have risen by a similar degree, through a combination of rates and fuel surcharges. Cargo handling costs at port terminals and inland distribution points have also increased dramatically. 

“Unfortunately, retail merchandise from Asia is not delivered anywhere near where pork, cotton or chemical resins are loaded for export,” Conrad pointed out. “Sometimes specialized equipment is required. Positioning that equipment entails transport, storage and handling costs that lines will continue to recover through the base rate structure. Once the loaded container is stowed aboard ship, if fuel is 60% of the sailing cost and fuel prices have doubled since January 2007, that’s a 60% increase in the operating cost per slot over 18 months. In many cases carriers are not recovering the pre-2007 base cost, let alone that increase.” Operational factors will continue to exert upward pressure on rates, even as higher fuel prices will prompt carriers to collect a greater share of published fuel surcharges in the near to mid-term, Conrad said.

WTSA is a voluntary discussion and research forum of 10 major ocean and intermodal container shipping lines serving the trade from ports and inland points in the U.S. to destinations throughout Asia. Information on all recent and scheduled guideline actions adopted by WTSA can be found on the Agreement’s web site, http://www.wtsacarriers.org.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.


About Us

We deliver market news & information relevant to your business.

We monitor all your market drivers.

We aggregate, curate, filter and map your specific needs.

We deliver the right information to the right person at the right time.

Our Contacts

1990 S Bundy Dr. Suite #380,
Los Angeles, CA 90025 795

+1 (310) 558 0008
+1 (310) 558 0080 (FAX)

About Cookies On This Site

We collect data, including through use of cookies and similar technology ("cookies") that enchance the online experience. By clicking "I agree", you agree to our cookies, agree to bound by our Terms of Use, and acknowledge our Privacy Policy. For more information on our data practices and how to exercise your privacy rights, please see our Privacy Policy.