The Transpacific Stabilisation Agreement, a group representing 14 major carriers in the eastbound transpacific container trades, has no plans to change its bunker surcharge formula, according to Brian Conrad, the TSA’s executive administrator.
The formula is based on a weighted average of weekly fuel prices. The current rate of US$905 for a 40-foot container is based on a weighted average price of $495.46 in December. The surcharge will remain $905 next month because the four-week average price per ton for bunker fuel in January was $485.80. The rate was $950 in January because the average price in November was over $500.
If the weighted average price this month goes below $480, the surcharge would be reduced to $860. The surcharge would be zero if the weighted average price per ton was less than $80.
Conrad said the formula effectively addresses long-term cost impacts from rising fuel prices, but he acknowledged that the carriers’ recovery of those costs through fuel surcharges has only been sporadic over the past several years.
The TSA’s goal is to restore “a full, floating bunker surcharge under the existing formula”. The carriers will make a concerted effort to achieve that goal in negotiating contracts with shippers for the 2008-09 contract year, which begins on May 1.
As an interim step to recover fuel price increases, TSA lines have individually gone out to customers with a variety of approaches to cover the period up to May 1 — whether through emergency surcharges, renegotiation of existing contracts or other means. Those increases would help offset the 65 percent jump in fuel prices last year alone, Conrad said.
The TSA administrator said any attempt at a direct, apples-to-apples comparison with the new Maersk formula would be misleading because the numbers posted on Maersk’s web site for transpacific port pairs are described as “for illustrative purposes only”. In addition, each carrier is different in terms of the historic portion of fuel costs already embedded in base rates, he said. That affects the remaining amount to be recovered through fuel surcharges.
Conrad added that TSA lines as a group went through fuel price calculation exercises with customers last year that are almost identical to the approach used by Maersk.
“We were able to demonstrate that our fuel surcharge accurately tracked prices; that our fuel-related costs were generally higher than the surcharge (quite a bit higher for East Coast all-water, and when taking into account empty equipment repositions to assure eastbound equipment availability); and that each $1 per tonne increase in fuel produces a significantly higher impact per container in fuel-related operating cost,” Conrad said.
The TSA web site also has a calculator for determining its surcharges for inland fuel costs.
The formula is based on a weighted average of weekly fuel prices. The current rate of US$905 for a 40-foot container is based on a weighted average price of $495.46 in December. The surcharge will remain $905 next month because the four-week average price per ton for bunker fuel in January was $485.80. The rate was $950 in January because the average price in November was over $500.
If the weighted average price this month goes below $480, the surcharge would be reduced to $860. The surcharge would be zero if the weighted average price per ton was less than $80.
Conrad said the formula effectively addresses long-term cost impacts from rising fuel prices, but he acknowledged that the carriers’ recovery of those costs through fuel surcharges has only been sporadic over the past several years.
The TSA’s goal is to restore “a full, floating bunker surcharge under the existing formula”. The carriers will make a concerted effort to achieve that goal in negotiating contracts with shippers for the 2008-09 contract year, which begins on May 1.
As an interim step to recover fuel price increases, TSA lines have individually gone out to customers with a variety of approaches to cover the period up to May 1 — whether through emergency surcharges, renegotiation of existing contracts or other means. Those increases would help offset the 65 percent jump in fuel prices last year alone, Conrad said.
The TSA administrator said any attempt at a direct, apples-to-apples comparison with the new Maersk formula would be misleading because the numbers posted on Maersk’s web site for transpacific port pairs are described as “for illustrative purposes only”. In addition, each carrier is different in terms of the historic portion of fuel costs already embedded in base rates, he said. That affects the remaining amount to be recovered through fuel surcharges.
Conrad added that TSA lines as a group went through fuel price calculation exercises with customers last year that are almost identical to the approach used by Maersk.
“We were able to demonstrate that our fuel surcharge accurately tracked prices; that our fuel-related costs were generally higher than the surcharge (quite a bit higher for East Coast all-water, and when taking into account empty equipment repositions to assure eastbound equipment availability); and that each $1 per tonne increase in fuel produces a significantly higher impact per container in fuel-related operating cost,” Conrad said.
The TSA web site also has a calculator for determining its surcharges for inland fuel costs.