February 26, 2015 – As expected, Eastbound Pacific carriers are announcing two rate hikes on the heels of the resolution to the West Coast labor issues.

Bill Mongelluzzo, Sr. Editor of the Journal of Commerce (JOC), confirmed carriers’ intent to raise rates $600 per 40-foot container starting March 9th, with an additional $600/container planned for April 9th.

According to the JOC article, 15 of the largest container lines involved in trades from Asia to the US are seeking additional revenue to begin repairing their networks. They are calling it the Transpacific Stabilization Agreement. This comes after the Feb. 20 tentative contract agreement reached by the International Longshore and Warehouse Union and the Pacific Maritime Association.

Expectations that imports from Asia are going to see strong growth following the Chinese New Year are also helping to fuel the proposals for general rate increases.

How It Affects Your Business

The rate increases are expected on March 9th and April 9th. Below are some things to keep in mind:

• Given all of the circumstances supporting the increases, companies should anticipate these increases will gain more traction than they did last year.
• Importers should count on higher freight costs for the first half of the year and possibly into the second half.

How You Should Handle It

Container Prices are going up. Here are some tips:

• Be proactive and plan for the increase in freight spend.
• In volatile markets rates can vary by sailing so check your rates often.
• Look into your carrier and service provider options. Having flexibility in uncertain times can help you ensure you are able to secure vessel space at a fair price.

We will continue to provide updates and support on these developments as they come.

Have more questions about how your business can respond to these changes? Contact LEGACY today.