Major shipping lines involved in the Asia-Europe trade are planning a series of rate increases through 2009 aimed at turning around the biggest loss-making container trade into at least a break-even situation.

Mitsui OSK Lines (MOL) plans to initiate a series of US$300 per TEU rate increases through 2009 on the Asia-Europe route westbound with the first increase being on April 1, followed by another on June 1 and a third on August 1. Eastbound, MOL also plans to initiate rates increases of $200 per TEU on April 1 and September 1.

MOL referred to the planned rate increases as "a general rate restoration on the Asia-Europe trade to maintain high service levels during the current economic climate".

MOL said it believes that while "increased freight rates are never very popular, the current downward trend is completely unsustainable. We are confident customers will recognise the need to maintain stability and viability in their supply chain operations over the long term".

Hapag Lloyd has announced a new tariff rate of $1,000 per TEU and $2,000 per FEU for the westbound Asia trade, and a new tariff rate of $250 a TEU and $500 per FEU eastbound.
These figures, the line says, include bunker and currency adjustment factors and will come into effect on April 1, followed by other increases through the year.

It is understood that Evergreen will push ahead with an intended $300 per TEU rate increase from April 1 on the westbound Asia-Europe trade.

Other lines are expected to announce similar increases over the next few weeks, but all a Cosco executive would say was: "This has been long awaited, and now the rest of the lines will follow with similar or identical increases."

But whether the lines will achieve the increases is extremely doubtful in the current climate. A China Shipping Container Lines source said: "Sure, it is the right step, but it is purely a bargaining position to achieve some rate increase, and it is unlikely customers will agree. But if the shipping lines walk away with say $100 per TEU, at least it is something."

Over the last quarter, shipping lines engaged in the Asia-Europe trade have been quoting so-called "all-in figures" for freight rates, which involve the general freight rate, plus the additional surcharges such as bunker adjustment figures (BAF) and currency adjustment figures (CAF).

With the demise of the conference system, each line can quote individually, and for March 2009, the BAF figures for westbound Asia-Europe run typically between $200-$300 per TEU and the CAF levels hover around six to eight percent.

Back in October 2008 when the conference system ended, the typical westbound BAF figures were between $600 and $800 per TEU, and CAF was anywhere between 12 to 18 percent.