The Westbound Transpacific Stabilization Agreement is a research and discussion forum of major container shipping lines that carry cargo from ports and inland points in the U.S. to destinations throughout Asia.
WTSA member carriers are authorized under the applicable shipping laws of U.S. and Asian governments to:
- Meet, exchange market information
and jointly conduct market research
- Represent carrier interests in consultations
with government regulatory bodies and with
designated shipper organizations
- Develop voluntary, non-binding guidelines
for rates and charges
- Discuss ways members can manage costs
and improve efficiency
- Establish common terms of service and standards
for certain documentation, information systems
development and other activities in the public interest,
also on a voluntary, non-binding basis.
History and Purpose
WTSA was established in 1990 and, over time, replaced a more rigid rate conference system in the U.S.-Asia market. It reflects an evolutionary process in liner shipping, from a regulated common carrier
Rate conferences and agreements have existed in the U.S. since 1916. Earlier conferences typically included major carriers in a trade
Non-conference or “independent” lines, typically newer market entrants building their services, used these enforced conference prices as benchmarks to set their own rates, usually a fixed percentage lower.
This system was intended to stabilize both rates and service levels, and thus provide an incentive for shipowners to keep vessels in a trade during downturns; invest in long-term vessel and facilities improvement
By the 1980s, ocean transportation was becoming more differentiated. Shippers in certain commodity or market segments wanted more sophisticated service options – door to door, time-definite delivery; specialized equipment and handling; valued-added warehousing and other services. Others remained focused on shipping at the lowest possible per unit price. Routing, schedule and cargo handling requirements became more specific.
Carriers needed an ability to respond quickly to changing market demand, and greater flexibility to offer individualized service and pricing as part of a long-term customer relationship. Shipping laws were relaxed in 1984 and 1998 to encourage such individual, confidential carrier-shipper relationships. Discussion agreements such as WTSA have become more common as these changes in the law have taken place.
WTSA carriers discuss trade conditions and agree on the need for common, recommended pricing and service goals. Adoption of policy guidelines requires a unanimous vote. But at the end of the day it is up to individual carriers to decide on a customer-by-customer basis whether to implement a guideline wholly, in part or not at all in their confidential service contract negotiations.
WTSA’s activities extend to the second largest ocean container trade lane in the world, with some 1.7 million 40-foot containers shipped annually. Countries included in WTSA’s scope are the U.S., Japan, Korea, Taiwan, Hong Kong, China, Singapore, Malaysia, Thailand, Indonesia, the Philippines, Brunei, Vietnam, Cambodia, Laos, Myanmar (Burma), Pakistan, Sri Lanka, Bangladesh and the Russian Far East.