New | Freight rate increase planned by container lines seen doomed amid market overcapacity
Carriers say current charges not enough to cover costs as demand climbs ahead of peak season
Container shipping giants are pushing for higher freight rates heading into the peak season to shore up revenue, but analysts say the tactic is unlikely to succeed given market overcapacity.
The Transpacific Stabilisation Agreement (TSA) said its members, including Maersk Line and Mediterranean Shipping, planned to incrementally raise US-Asia route rates from next month, with further increases in November and December. It did not give more details.
An increase in demand is usually seen in the run-up to the US Thanksgiving holiday and Christmas season in the West.
TSA said carriers saw a bottom in the market and expected a recovery in the fourth quarter. "US-Asia freight rates have fallen to historically low levels," TSA-Westbound executive administrator Brian Conrad said.
Conrad also said current rates did not fully cover costs in many cases, and the increases were needed to halt damaging rate erosion.
Shipping lines usually introduce general rate increases during the second and third quarters, but their effect is often minimised by competitive factors.
In the first week of this month, the China containerised freight index dropped 1.5 per cent from the previous week to 820.91 points, 24 per cent below the index average for last year.