For most container carriers, 2010 has got to be a turnaround year because they cannot survive another four quarters of losses. The rebounding U.S. economy will bring an improvement in freight volumes in 2010, but freight rates cannot remain at current levels.
In the trans-Pacific, major carriers have already made it clear their turnaround plans call for increases to eastbound rates in 2010 of $800 to $1,000 per FEU, with floating bunker surcharges on top. When? Some carriers are saying “How about now?” Why wait until the traditional May 1 date for general rate increases?
Many rates moving substantial volumes of boxes in this trade lane are now $1,000 per FEU lower than they were 12 months earlier. These rates are unsustainable. They were agreed to by carriers during the desperate summer of 2009 when cargo volumes fell even further than expected and carriers reacted by cutting rates to historic lows.
As cargo volume improves in 2010, shippers must realize carriers can renegotiate contracts once minimum quantity commitments are met and before contracts expire. Or should I say try to renegotiate? And carriers always have the option of filing creative new surcharges in tariffs, waiting 30 days for these to take effect, and then applying them to contract shipments.
No one should expect the Federal Maritime Commission to block the re-entry of Maersk Line into the Transpacific Stabilization Agreement, but everyone should expect this group of carriers will make a very strong push to increase freight rates and surcharges in 2010. The survival of most of its member carriers depends on it.