Home » Breaking News, Maritime » TSA: Market recovery helping GRIs stick, key to contract talks
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The gradual upturn in cargo volumes over the past few months will help carriers sustain the latest round of general rate increases (GRIs) that took effect on April 1, according to the Transpacific Stabilization Agreement (TSA).

The TSA said in a statement released today that strengthening demand and a reversal of rate erosion seen since the end of 2012 are critical to ongoing negotiations with freight shippers toward signing the 12-month contracts under which more than 90 percent of containerized cargo from Asia to the U.S. moves. Most of those contracts come up for renewal on or around May 1.

“The April 1 increases are intended to restore current market rates closer to sustainable levels, to then pave the way for negotiation of further meaningful increases in the contracts themselves. Carriers will continue to assess the current market in the coming months, seeking further opportunities for improvement in moving market rates,” the TSA said.

TSA executive administrator Brian Conrad said the current trend of modest but steady growth is expected to continue in 2013, with improved vessel utilizations already apparent throughout April, following the traditional post-Lunar New Year lull. “Coming off a period of close to zero cargo growth in 2012, the outlook is definitely more positive at this point,” he said.

Conrad said that despite repeated efforts to shore up rates during the 2012-13 contract season, revenue gains were inconsistent, as reflected in dire financial reports and ongoing industry consolidation, service changes, and formation of new alliances.

“As we head into the bulk of the negotiations in April,” he explained, “it is critical for shippers to understand that rates which reflect little or no increase in rates over 2012 levels are simply not sustainable in the long run. The financial repercussions are serious, and carriers are looking to ensure that new contracts include rates that reflect a meaningful increase above 2012 levels, and closer to the post-April 1 market trends.”

TSA is a research and discussion forum of major container shipping lines serving the trade from Asia to ports and inland points in the U.S. Its members include APL, China Shipping Container Lines, CMA-CGM, Cosco Container Lines, Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, Kawasaki Kisen Kaisha, Maersk Line, Mediterranean Shipping Co., Nippon Yusen Kaisha, Orient Overseas Container Line, Yangming Marine Transport, and Zim Integrated Shipping Services.

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