Bloomberg News

Container Lines Plan Asia-U.S. Rate Increase After Losses

November 15, 2011

(Adds group’s comment in fourth paragraph.)

Nov. 14 (Bloomberg) -- A.P. Moeller-Maersk A/S, the world’s largest container carrier, and 14 other shipping lines plan to raise rates on Asia-U.S. routes beginning Jan. 1 after a price war and overcapacity caused industrywide losses.

The companies, which also include Neptune Orient’s APL Ltd. and CMA CGM SA, intend to impose a levy of at least $400 per 40- foot container as a temporary measure ahead of the start of annual contract negotiations, the Transpacific Stabilization Agreement said in an e-mailed statement today. The TSA shipping group has limited antitrust protection that lets it set rates guidelines.

The shipping lines intend to take advantage of a pick-up in bookings ahead of the late January Lunar New Year holidays to win higher rates after waning consumer confidence and slower- than-expected demand scuttled the implementation of peak-season surcharges. The third-quarter slump caused Maersk, based in Copenhagen, to last week say that its container unit would make a loss this year, compared with earlier predictions for a profit.

“Rate levels during 2011 have steadily eroded despite rising inland transport, cargo-handling and other costs,” Brian M. Conrad, the TSA’s executive administrator, said in the statement. “As carriers look toward building a platform for the 2012-13 contract cycle, the feeling is that a correction is both imperative and overdue.”

The planned rate increase will prevent reductions offered this year from affecting the next round of annual contracts, starting around May, the group said. The TSA plans to announce guidelines for the next contracts around year end, it said.

The other members of the group comprise Kawasaki Kisen Kaisha Ltd., China Shipping Container Lines Co., Mediterranean Shipping Co., China Cosco Holdings Co., Nippon Yusen K.K., Evergreen Group, Orient Overseas (International) Ltd., Hanjin Shipping Co., Yang Ming Marine Transport Corp., Hapag-Lloyd AG, Zim Integrated Shipping Services Ltd. and Hyundai Merchant Marine Co.

--Editors: Neil Denslow, Garry Smith

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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