Transportation Management Preparing for Incoming Rate Hike

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Shipments across the Pacific are about to become a bit more expensive. A group consisting of 10 of the top transpacific shipping carriers has issued new rate guidelines that include a $600 surcharge per 40-foot container starting June 10, ,2012. The increase is in response to the growing number of shipments heading westward from the United States to Asia, which has put bookings at close to 95% capacity.

According to Logistics Management, a spokesperson for the Transpacific Stabilization Agreement (TSA) stated, “The PSS is intended to cover extraordinary seasonal costs associated with anticipated cargo surges that can require leasing of vessel and equipment capacity, routing or schedule changes, special port terminal or inland transportation arrangements, added staffing or other measures to cover short-term contingencies.”

The growing demand for meat products in Asia, particularly beef and pork, is one of the driving forces behind the increased westward shipments and part of the reason for the proposed increase in shipping costs. Countries such as China and Japan are growing increasingly reliant on importing beef and pork to meet demand. According to the U.S. Meat Export Federation, January and February of this year alone saw 27% of American pork production and 12.9% of beef production exported outside the United States.

All of this activity presents a challenge for transportation management professionals as well as the rest of the supply chain, who are having to handle the rate hikes along with the increased shipping activity and growing need for refrigerated transportation. With the recent reports of a more optimistic outlook on the part of business owners, a surge in exports, and the increase in supply chain system software adoption, there is quite a bit of good news to help offset the oncoming shipping rate hike.

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