WTSA Lines to Phase in Full. Floating Bunker Charge for Wastepaper Shipments to Asia


Oakland, CA / November 26, 2007 Container lines in the Westbound Transpacific Stabilization Agreement (WTSA) announced plans to begin recovering a greater share of fuel costs in their contracts with wastepaper shippers.

Effective January 1, WTSA lines say they intend to assess bunker fuel surcharges separately from base freight rates for wastepaper, and allow those surcharges to float, adjusted on a regular basis to reflect fluctuations in world bunker fuel prices. Wastepaper contracts have typically included provisions mitigating the bunker surcharge and folding it into an all-inclusive rate, owing partly to the low shipment value and unique price structure of U.S. wastepaper shipments to Asia.

WTSA lines are taking a first step with respect to the leading commodity in the trade in terms of volume,” said Agreement executive administrator Brian M. Conrad. “Wastepaper rates are low from the outset, and downward pressure on rates over time has eroded fuel cost recovery buried within the rates. At the volumes wastepaper moves, it is nowhere near making an adequate revenue contribution as fuel costs have risen 55% since the beginning of 2007 alone.”  More than 233,000 40-foot containers (FEU) of wastepaper moved from the U.S. to Asia in the first half of 2007, accounting for 18.3% of the total westbound market.

WTSA stressed that setting bunker surcharges separately from base rates does not mean lines intend to offset the new surcharges with base rate concessions, nor do the new surcharges preclude separate actions on rates during 2007 as market conditions dictate.

WTSA is a voluntary discussion and research forum of 10 major ocean and intermodal container shipping lines serving the trade from ports and inland points in the U.S. to destinations throughout Asia.

WTSA members include:

APL, Ltd.
COSCO Container Lines, Ltd.
Evergreen Line
Hanjin Shipping Co., Ltd.
Hapag Lloyd AG

Hyundai Merchant Marine Co., Ltd.
Kawasaki Kisen Kaisha, Ltd. (K Line)
Nippon Yusen Kaisha (N.Y.K. Line)
Orient Overseas Container Line, Inc.
Yangming Marine Transport Corp.



Contact: Niels Erich
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