Shippers seek rate rise for waste paper
Cosco Container Lines, Orient Overseas Container Line, NYK Line and seven other shippers plan to raise rates on containers carrying waste paper by at least 10 per cent, after a US railway operator increased its charges for intermodal transport by more than 20 per cent.
The shipping lines' proposed US$100 rate increase per 40-ft equivalent unit (feu), starting from May 1, will apply to waste paper moving from the United States to Asia, known as westbound trade, for intermodal transport.
Port-to-port transport will not be subject to the adjustment, according to an e-mail from NYK Line.
Waste paper is a key component of westbound trade shipments, an industry source said, while declining to confirm it was as much as 20 per cent as some reports claimed.
The increase 'can only cover part of the additional railway charges', said NYK Line (HK) general manager Kevin Ng. Shipping lines tend to provide door-to-door logistics to exporters and have to absorb any rise in inland transport costs.
Another rate increase of US$100 per feu on waste paper would be proposed in September, which will apply to all waste paper containers, according to Mr Ng.
The charge for westbound shipments such as waste paper is US$500 to US$600 per feu, much lower than eastbound shipments, imposing a drag on shipping lines' operating income.
Due to the trade imbalance between the US and China, westbound vessels are generally only half full, making it hard to increase rates in the trade link.
The mainland, as the world's manufacturing plant, imports waste paper from the US for recycling into packaging material, said Michael Chan, transport analyst from Macquarie Securities.
An increase in demand from the mainland for waste paper is also helping push through the call for a rate rise.
