Major U.S.-Asia container carriers say they plan a two-stage series of freight rate increases for wastepaper during 2007. Member lines in the Westbound Transpacific Stabilization Agreement (WTSA) are recommending an initial US$100 per 40-foot container (FEU) increase in wastepaper rates for inland point and coast-to-coast minilandbridge intermodal shipments, effective May 1, 2007. All-water, port-to-port rates are also expected to see an increase sometime after May 1, with the precise amount and timing still to be determined.
Later in the year, WTSA is recommending a second-stage increase for intermodal rates only, of another $100 per FEU, to take effect on September 1, 2007.
WTSA points out that wastepaper rates are among the lowest in the trade, for a commodity that historically accounts for 20% of the market by volume. This has presented operational and cost difficulties in a market that faces a near 3:1 imbalance of cargo and equipment inbound to the U.S. versus outbound to Asia, and in which inland transport, cargo handling, maintenance and other fixed costs together have risen steadily. Carriers are under growing pressure to reposition containers quickly with Asian manufacturers, as well as recover full operating costs over the round trip sailing. This in turn has placed sustained upward pressures on wastepaper rates.