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May 26, 2014

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10 THE JOURNAL OF COMMERCE MAY 26.2014 TOP 100 IMPORTERS AND EXPORTERS By Bill Mongelluzzo Trans-Pacifi c contracts are falling short of the break-even price point, making carriers' long climb back to profi tability only longer THE RESULTS OF the 2014-15 service contracting season in the eastbound Pacifi c are in, and from the perspective of ocean carriers, they're not pretty. Unless carriers can score impressive gains on the spot market and with peak-season surcharges, neither of which are guaranteed, it looks like they will lose money again in the busiest U.S. trade lane, and that doesn't bode well for carriers that as a group have notched billion-dollar losses in four of the last fi ve years. Most of the major retailers and other large importers have signed contracts covering the period from May 1, 2014, to April 30, 2015. The average freight rate for shipping a 40-foot container from Asia to the West Coast will be well below the $2,000 rate carriers consider break- even for the services. Although service contract negotiations between benefi cial cargo owners and shipping lines are confi dential, anecdotal reports indicate the average freight rate from Asia to the West Coast is $1,750 per FEU, with some importers signing at lower rates than that. The average rate on an all-water service to the U.S. East Coast is $2,900. Ocean carriers that are pricing particularly aggressively, putting vol- ume and market share above what could be considered good business Carriers Miss the Mark

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