As L.A.-area exports to Asia slowly pick up, shipping lines are looking to make up for the lean years by instituting stiff rate hikes on outbound cargo. But industry insiders said the hikes might not stick because there remains a substantial number of empty containers being sent to Asia to accommodate Asian imports back to L.A.

Last month, the Westbound Transpacific Stabilization Agreement, a group of the largest ocean carriers serving West Coast ports, announced rate hikes on everything from wastepaper to frozen meat. The hikes range from 20 percent to 50 percent, depending on the commodity, which translates to an extra $100 to $500 per 40-foot container. Some of the increases have gone into effect already, while others will be phased in over the next few months.

“The lines are beginning to see a significant rebound of export cargo,” said Niels Erich, spokesman for the WTSA. “There are strong signs that the economic recovery in Asia is gaining strength because the consumer markets for fresh fruit and frozen meat and poultry are coming back.”

When the bottom fell out of the Asian economies in the fall of 1997 and the markets for U.S. goods evaporated, carriers had to cut their rates for outbound cargo by as much as 40 percent. Rates for high-valued goods, which used to be $3,000 to $3,500 per 40-foot container, fell to below $2,000. For high-volume, low-value goods such as wastepaper and scrap metal, the rates fell as low as $200 per container.

Now that overseas demand for U.S. goods is coming back, shippers see it as an economic necessity to recover some of the rate cuts from the last two years.

“At the moment we’re losing money on outbound cargo (due to the high number of empty containers),” said Bob Kleist, an advisor with Evergreen America Corp. “We can stay in the dumps and go broke, but if we’re going to stay in business, we have to increase rates somewhere along the line.”

But the shipping lines aren’t the only ones who face financial challenges.

“These increases worry a lot of small and mid-sized exporters,” said Ray Bowman, a consultant with the Export Small Business Development Center. “They have seen their trucking costs go up already because of higher fuel prices, and these are low-markup industries that cannot easily absorb the impact of such rate hikes.”

Kleist acknowledged that the rate increases would only stick if enough carriers go along with it.

In a sense, carriers have become victims of their own success. As U.S. imports from Asia have grown exponentially over the last few years and shipping rates for inbound cargo have gone up, numerous carriers are entering the lucrative transpacific trade. This has created an overcapacity of containers for the outbound routes.

Thus, whereas the number of loaded outbound containers from the Port of Long Beach is up 4.8 percent so far in fiscal 1999-2000, the number of empty outbound containers is up 12.6 percent.

Despite the recovering Asian export markets, the number of empty containers shipped from Long Beach and Los Angeles to Asia exceeds the number of loaded ones. And it’s that persistent imbalance between imports and exports that causes some insiders to question whether carriers can successfully raise rates on outbound cargo.

Others feel more confident that carriers will be able to maintain a unified front and push the increases through.

Erich says many of the carriers that have entered the transpacific trade over the past year did so to benefit from Asian imports into the United States and have no interest in competing for the low-margin export cargo.

“Some don’t even solicit westbound (export) freight and are content to ship back empties,” he said. “Other companies have a global service such that their ships don’t sail from west to east at all. The bottom line is that there is no room to discount on outbound cargo.”

Aside from whether rates will go up, another issue is the unusual arrangement whereby carriers get together and discuss rates.

“Ocean carriers and Major League Baseball are the only ones that are exempt from antitrust legislation,” complained Jack Finholm, vice president with freight forwarder Fritz Cos. “This immunity was intended to protect carriers that sailed under the U.S. flag, but there aren’t any of these left anymore.”