COSCO to increase US-Asia cargo rates
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China COSCO Holdings Co and nine other shipping firms are planning to increase rates for hauling containers to Asia from the US in a bid to stem losses on transpacific routes.
The new rates are expected to be effective from April 1 this year and are part of the Westbound Transpacific Stabilization Agreement (WTSA). Under the plan, dry cargo rates would go up by $300 per 40-foot container (FEU) and by $240 per 20-foot container (TEU).
Refrigerated cargo rates would be increased by $300 per FEU and $240 per TEU for US West Coast cargo, and by $500 per FEU and $400 per TEU for cargo from the US East and Gulf coasts.
"From the third quarter of 2009, we have been increasing rates after the sharp drop during the financial crisis. It has so far worked well for us," said Hu Yu, investor relationship manager of COSCO.
Though US-Asia freight rates are currently at the same levels as in early 2008, despite modest improvements in cargo demand and rates in recent months, all carriers continue to lose money in both directions between the US and Asia, said WTSA Executive Administrator Brian Conrad. "This has put sustained pressure on the westbound backhaul segment of the market to make its full contribution to roundtrip costs, particularly given cargo imbalances, equipment repositioning and other constraints unique to the trade," he said.
COSCO Shipping Co, the only mainland-listed unit of COSCO group, reported a 90.6 percent decrease in pre-audited net profit to 135.5 million yuan in 2009.
WTSA's other members include APL Ltd, Evergreen Line, Hapag Lloyd AG, Hanjin Shipping Co Ltd, Hyundai Merchant Marine Co Ltd, Kawasaki Kisen Kaisha Ltd, Nippon Yusen Kaisha, Orient Overseas Container Line Inc and Yangming Marine Transport Corp.
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