End of an era for Transpacific Rate Agreement

While Asia Pacific ocean carriers are still coming to grips with the bankruptcy of Hanjin and ongoing rate erosion, another threat to sustainability in the trade was sounded by the few remaining members of the Transpacific Stabilization Agreement (TSA), which announced that it would dissolve next month.

This represents the end or an era . After almost 30 years of acting as voice for the ocean carrier industry in the U.S. transpacific trade, the TSA will officially close its doors on February 8, 2018. Leading up to this announcement was the news that Maersk Line was the latest to exit the agreement. That followed the exit of K Line, NYK and Zim.

According to industry analysts, the once powerful agreement fell victim to the current wave of carrier consolidation which left it with but seven carriers: Cosco-OOCL, CMA CGM, Evergreen, MSC, HMM, Yang Ming and Hapag-Lloyd.

Established in 1989, TSA was among the first carrier discussion agreements formed after passage of the 1984 Shipping Act in the U.S.  In addition to TSA’s commercial initiatives, the Agreement represented a forum for the lines to discuss trade conditions, market developments, and business and economic trends.

“TSA has for many years served a valuable function to the carriers and other industry stakeholders,” said executive administrator Brian Conrad.  “Liner shipping is a privately-financed infrastructure for Asia-U.S. trade.  TSA has been a key element in helping to maintain and grow a wide range of carriers operating in the trade over the long-term, offering shippers the broadest, most reliable choice of service options possible.  It has also been a strong advocate for carrier interests with both global regulators and the shipping public.”

Regarding TSA’s decision to close its doors, Conrad added that “the commercial and operational environment in the transpacific trade and, more broadly, in ocean transportation worldwide, has experienced significant changes in the past few years that are likely to continue through 2018 and beyond. During these challenging times in shipping, it became apparent that the TSA’s original mission was no longer viable, but I believe that TSA has performed an important role over the years in supporting the development of U.S. international trade.”