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Ship lines plan price hike
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November 4, 1998: 6:25 a.m. ET
Pacific shipping group sets 30% hike but new laws may thwart effort
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NEW YORK (CNNfn) - Shipping lines moving goods from Asia to North America, seeing a major jump in their traffic levels over the summer, are planning to boost prices by roughly 30 percent next year.
But whether or not they can succeed in the face of new laws introducing greater competition into the shipping industry is questionable.
The ship lines' action also comes as the Federal Maritime Commission, the U.S. agency responsible for regulating shipping to and from the United States, investigates complaints of price-gouging by carriers during the busy summer season.
The Transpacific Stabilization Agreement, a group of 13 shipping lines that coordinate pricing actions with one another, said its members plan to hike prices by $900 a 40-foot container for moves from Asia to the West Coast. Prices will increase $1,000 for goods destined to other areas in the United States.
In addition, the group said it will impose a "peak season" surcharge of $300 a load from June 1 through Nov. 30. Summer is typically the busiest season for ship lines serving the United States, as manufacturers and retailers try to stock up inventories in anticipation of the holiday season.
Shipping rates vary depending on the commodity involved. Consumer goods, for example, tend to command rates in excess of $2,500 a 40-foot container, versus base commodities that tend to move for less.
But shipping rates are also subject to negotiation. And the haggling is likely to get intense this year.
Under recently enacted laws ship lines, which have antitrust immunity to collectively set rates, have greater freedom to arrange private contracts with individual importers and exporters. That, according to shipper groups that fought for the legislation, increases the odds that ship lines with undercut group pricing actions in an effort to win business.
"Ultimately a lot of this will be determined by what the market conditions are," said Peter Gatti, director of policy for the National Industrial Transportation League, a group that lobbies for U.S. businesses on transportation issues.
Most of the ship lines serving North America are controlled by companies based in Asia or Europe. The major U.S. shipping line is Sea-Land Service Inc., a unit of CSX Corp. (CSX), which closed up 7/16 at 39-5/8 Tuesday. 
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