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March 2 2020

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8 The Journal of Commerce | March 2 2020 www.joc.com Trans-Pacific Maritime Special Report HEADING INTO TRANS-PACIFIC service contracting season, container lines say they're confident they will sign all-inclusive freight rates that are slightly higher than last year, with higher fuel surcharges tied to new global regulation driving much of the increases. The existing 2019–20 service contracts that will expire May 1 resulted in rates that were about $200 to $300 per FEU higher than the 2018–19 contract rates. Carriers and their customers said they felt the 2019–20 service contract rates reflected market conditions in the spring of 2019, when import volumes were still increasing, before the fourth set of import duties on Chinese merchandise took effect and drove volumes down. Carriers and beneficial cargo owners (BCOs) who are meeting March 1–4 at the annual TPM conference in Long Beach will listen to economic and cargo volume fore- casts, and they will then return to negotiations to discuss actual price quotes before signing the annual contracts that will run generally from May 1 through April 30, 2021. In preliminary negotiations for the 2020–21 service contracts, according to conversations with six carriers, five BCOs, and four non-vessel-operating common car- riers (NVOs), shippers say they have endured nearly two years of capacity management by carriers attempting to prop up freight rates, so importers are focusing more this year on carri- er reliability and fulfillment of space commitments. Six executives from separate carriers told The Journal of Commerce cargo owners are in fact indicating their priority this year is ensuring their shipments are not rolled in Shippers keying on service reliability in trans-Pacific contract negotiations By Bill Mongelluzzo

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