NEW YORK — Ocean freight carriers are giving apparel importers advance warning about their intent to move aggressively in the next two years to recoup rapidly rising fuel costs.
Freight rate contract negotiations between ocean carriers and importers kick off in March and are typically concluded by May 1. In previous years, the Transpacific Stabilization Agreement (TSA), a conglomerate of 14 shipping lines that negotiates rates from Asian ports, has sought to justify increases by citing factors ranging from growth in trading volume to higher investments in terminal operations and security. Fuel prices have always figured into the negotiations, but the rhetoric from TSA heading into 2008 indicates that fuel will be the primary issue.
In a keynote speech at the Textile & Apparel Importers Trade and Transportation Conference last month, Ron Widdows, chief executive officer of ocean carrier APL and executive committee chairman of the TSA, characterized fuel costs as the “most significant problem” facing the industry.
“The simple story is the cost of fuel has not been recovered in any way, shape or form in the rate and that is an enormous problem in this trade,” he said.
Widdows said the price of a metric ton of bunker fuel has jumped to more than $500 after starting the year at around $250, and compared with less than $75 in 1998. Fuel represents more than 50 percent of ship operating costs. Despite the extreme fluctuation, carriers find themselves locked into contracts that limit their ability to recover those costs.
A statement released by the TSA on Nov. 14 said the gap between what carriers spent on fuel and what they recouped in surcharges totaled more than $5 billion between February 2006 and August 2007. With fuel prices not likely to come down, Widdows told conference attendees that carriers moving goods from Asia were “going to take a heck of a beating serving the U.S. market.”
Carriers are being forced to come up with ways to compensate for the discrepancy. Their solutions could pose problems for importers looking to get their goods on stores shelves in a timely fashion. Boats are being slowed down to conserve on fuel and lines are shifting capacity to the more profitable trade lanes. Widdows noted that such tactics only mitigate the problem.The TSA laid out the rate increases it would be seeking in a statement on Nov. 1. Member lines, which include APL, Hanjin Shipping and Cosco, will look to charge $400 for each standard 40-foot container, known as an FEU, shipped from Asia to the West Coast. A charge of $600 per FEU is sought for containers destined for the East Coast, whether they be moved from West Coast ports by rail or truck or sail through the Panama Canal. A $400 peak season surcharge is also being sought for shipments traveling between June 1 and Oct. 31.
The TSA also said it was looking for “an immediate adjustment” to existing contracts and that all new contracts for 2008 would include a floating bunker surcharge.
Last year, the TSA sought $300 per FEU from Asia to the West Coast, $650 per FEU for moving goods inland by rail or truck from West Coast ports and $500 per FEU for shipping goods to the East Coast through the Panama or Suez Canals. The peak-season surcharge was, again, $400 per FEU. However, the peak season dates ranged from June 15 to Oct. 15.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast