👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Transpacific liners endorse freight rate increase

Published 11/22/2010, 06:26 AM
Updated 11/22/2010, 06:28 AM

* Pacific shipping body recommends rate rises from May 1

* Nordea says recommendation amounts to a 10 pct increase

* TSA forecasts 6-9 percent Asia-U.S. market growth in 2011

COPENHAGEN, Nov 22 (Reuters) - 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.

Calling it a "voluntary guideline contract programme" for 2011-12, the TSA recommended rate increases of $400 per 40-foot container (FEU) for cargo moving to the U.S. 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 percent, 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, privately owned Switzerland-based Mediterranean Shipping Company (MSC), French privately held CMA-CGM, China's COSCO, Korea's Hanjin Shipping 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-U.S. cargo growth for the year has been surprisingly strong, and is forecast to settle near 12 percent by year-end," it said.

TSA lines forecast 2011 cargo growth from Asia to the United States in the 6-9 percent range, the organisation said.

Nordea said the 2011 growth forecast was in line with its own estimate of 7 percent, 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 percent 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 United States.

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.

(Reporting by John Acher; Editing by Michael Shields)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.