THE implementation of the rate restoration program in the intra-Asian trade is relatively “weak” compared with those in other markets such as the United States, Europe and Japan.
Some shipping lines – mostly members of the Intra-Asia Discussion Agreement (IADA), a group representing shipping lines trading within Asia – have expressed disappointment over some carriers’ refusal to apply the agreed-upon restored rates in the intra-Asian trade.
Approximately 80% of the carriers which have operations in the Philippines are IADA members.
In a recent dialogue with freight forwarders, RCL Feeders Philippines, Inc. marketing manager Nestor del Rosario said the rate restoration is 100% successful in all areas except Asia.
“While majority of the shipping lines in other trade routes are currently enjoying rate recoveries, the Intra-Asian carriers are… struggling,” he said, noting a number of carriers have opted not to implement increased rates despite the agreement. This, he stressed, has resulted in unfair competition.
IADA started implementing this year’s rate restoration program in April, allowing for a $25 per twenty-foot equivalent unit (TEU) and $50 per forty-foot equivalent unit (FEU) additional rate to the carriers’ base.
In June, the conference once again agreed to impose an additional rate of $50 per TEU and $100 per FEU. The same rates applied in the agreement approved in September.
Del Rosario said the total rate restoration for the entire 2004 was supposed to be from $150 to $300. However, only 50% of the carriers are currently imposing the rate increases, he noted.
In an interview, China Shipping Manila Agency, Inc. general manager Wilfredo M. Monillas confirmed his company, although not an IADA member, has already implemented about $50-$100 rate increase this year.
“There are certain carriers that, despite the agreement, reduce their rates even more. But I think rate restoration is really needed. Rates have been down for a very long time already,” he pointed out.
Hanjin Shipping senior vice president for Sales Modesto F. Ramos attributed the reluctance of some shipping lines to adhere to the rate restoration program to a number of factors, including the difference in costing and service capacity.
“The intra-Asian trade is being served by global, regional and even small flag carriers. It is very difficult to unify when those involved have varied interests. In some cases, a shipping line refuses to increase their rates for fear of facing stiffer competition,” he said.
Ramos said the intra-Asian market is the most complex of all trade areas that is why carriers prefer to impose increased rates “corridor by corridor”. Compared with the previous years, the attempt to restore rates this year is more apparent, he said.
“I think we are well on our way to recovery, especially now that communication among shipping lines are much open,” he said.
The carriers expressed optimism that the rate restoration will continue up to the first quarter of next year.
