A cargo ship from Neptune Orient Lines Ltd.’s APL Ltd. unit is moored at the Port of Busan in South Korea in February 2009.

Neptune Orient Lines Ltd.’s APL Ltd. unit, China Cosco Holdings Co. and 12 other container lines agreed to raise rates on Asia-US routes, seeking to end a price war caused by slumping demand, overcapacity and “panic.”

Container lines will try to raise rates again after an April increase collapsed amid rising competition and a 20 percent drop in demand, the TSA said. Spot market Hong Kong-Los Angeles rates have slumped to as low as $900, according to Lloyd’s List, as US retailers pare orders for Asian-made furniture and toys on weak consumer spending.

“The eastbound transpacific trade lane has been driven by panic,” Lee Won Woo, chief executive of TSA member Hanjin Shipping Co.’s container unit, said in the statement. “Panic is difficult to stop once it has begun.”

Resist pressure

Average revenue per container dropped as much as $1,200 from October to May, the TSA said. Container lines should have resisted pressure to cut rates covered by longterm contracts to match spot rates, it added. Hong Kong-Los Angeles spot rates have fallen about 56 percent over the past year, Lloyd’s List said on July 3, citing Drewry Shipping Consultants.

“The lines are taking the opportunity of the peak season to reduce losses,” said Quam Ltd. analyst Allen Wong. “That doesn’t mean demand has come back.”

Container-shipping lines traditionally raise rates in July and August as shops stock up for the peak back-to-school and holiday shopping periods. China Shipping Container Lines Co., the country’s second -biggest box carrier, has said it plans to almost double rates on Asia-Europe routes this month.

Neptune Orient, Southeast Asia’s biggest container line, dropped 1.4 percent to S$1.42 in Singapore trading. China Cosco, China’s biggest, fell 3.3 percent to HK$8.51 in Hong Kong. Other TSA members including

Evergreen Marine Corp. and Orient Overseas (International) Ltd. also declined.

Shipping lines have laid up vessels, canceled routes and fired staff as they battle plunging trade. Evergreen, Asia’s biggest container line, said Wednesday that it plans to retire 31 ships. Yang Ming Marine Transport Corp. on Tuesday announced delivery delays of as long as 15 months for 14 new vessels.

“The damage is serious,” Lee said. “If current rates are extended out over 12 months, it is likely that the trade will encounter significant financial challenges.”

Neptune Orient, which has announced 1,000 job cuts, posted its biggest quarterly loss in at least seven years in the three months ended April 3.

APL, China Shipping, CMA-CGM, Cosco Container, Evergreen Marine, Hanjin, Hapag-Lloyd AG, Hyundai Merchant Marine Co., Kawasaki Kisen Kaisha Ltd., Mediterranean Shipping Co., Nippon Yusen K.K., Orient Overseas, Yang Ming and Zim Integrated Shipping Services make up the 14 members of the Transpacific Stabilization Agreement.

Source: Bloomberg