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Carriers under TSA to raise cargo rates to US in May

Shipping companies in the Transpacific Stabilisation Agreement (TSA) have backed a May 1 increase in container cargo rates to the United States, which it said are lagging other Asian container markets, according to a Reuters report.

Calling it a "voluntary guideline contract programme" for 2011-12, the TSA recommended rate increases of US$400 per (NZD$521) 40-foot container (FEU) for cargo moving to the US West Coast and $600 per FEU for all other cargo.

Swedish bank Nordea said in a note to clients that the recommended increases were about 10%, but it added that it expected actual rate increases in 2011 to be lower than that.

TSA members include the world's biggest container shipping groups, Denmark's Maersk Line (MAERSKb.CO), privately owned Switzerland-based Mediterranean Shipping Company (MSC), French privately held CMA-CGM, China's COSCO (1919.HK), Korea's Hanjin Shipping (000700.KS) and others.

Shipping has been recovering in 2010 from a deep plunge in 2009 in the wake of the global crisis hitting world trade.

"TSA carriers noted a dramatic tradewide improvement in the supply-demand situation for freight shippers during 2010," Oakland, California-based TSA said in a statement late on Friday.

"Asia-US cargo growth for the year has been surprisingly strong, and is forecast to settle near 12% by year-end," it said.

TSA lines forecast 2011 cargo growth from Asia to the US in the 6-9% range, the organisation said.

Nordea said the 2011 growth forecast was in line with its own estimate of 7%, but it added that it expected limited rate increases owing to the delicate balance in the market.

"Moreover, we argue that the market will settle for rate increase of less than 10 percent and we estimate a 1% rate increase for Maersk Line in 2011," Nordea said.

"We expect rates to be under pressure until the end of (the first quarter of) 2011, which will create investment opportunities in the stock," Nordea said.

Founded in 1989, the TSA calls itself "a research and discussion forum" of major container shipping lines serving the trade from Asia to the US.

Liner shipping was earlier organised in similar groups called "liner conferences", which met to discuss market conditions, freight rates and other common concerns.

But the European Union decided in 2006 to ban the practice as against competition rules and the ban took effect in 2008. – Source Reuters