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Pacific ship rate hike set
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November 19, 1997: 10:20 a.m. ET
Shipping lines decide to boost rates for moving goods from Asia to U.S.
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NEW YORK (CNNfn) - Pacific ocean ship lines hope to raise prices for moving goods from Asia to the United States by roughly 5 to 10 percent in the coming year.
Working through the Transpacific Stabilization Agreement, an organization that allows shipping lines to coordinate pricing actions, the 15 major carriers plying the waters of the Pacific agreed to raise prices by $300 per 40-foot marine container starting May 1, 1997.
Ocean freight rates differ from commodity to commodity. The $300 increase would hit shippers of low-value commodities, which typically cost less to move, with a higher percentage hike.
The Pacific shipping cartel has tried similar increases in past years. However, an over-abundance of shipping space on the trade lane led to shipping lines undercutting each other on price.
The Transpacific Stabilization agreement claims that competition has led to rate drops of $750 to $1,200 per 40-foot container over the last two years.
"This increase is an attempt to try to recover some of that," said Robert Peavey, general counsel for the carrier organization.
The ship lines believe a recent hike in demand, fed by a stronger dollar overseas, will tighten ship space and allow the increase to stick. Ship lines hope this situation will boost prices not only on the Pacific, but the Atlantic as well.
But importers don't totally agree.
"I don't think a $300 increase will hold," said Mike Donahue, corporate traffic manager at Converse Inc. "They'll try for some and they probably deserve some sort of increase. The bottom really fell out from under them. But not a $300 increase. That's too much at once."
Ship line rates to and from the United States are monitored by the Federal Maritime Commission. Rate increases generally are allowed to go into effect without any action by the agency.
-- by staff writer Allen Wastler
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