The Global Shippers Forum (GSF) has reacted with suspicion to the announcement by Maersk of new fuel surcharge arrangements from 1 January 2019 to recover costs from the introduction of low sulphur marine fuel from 1 January 2020.
They claim that because the charge is per box, “the greater number of revenue-earning boxes sailing west will collectively pay far more than they need to in order to compensate for the same boxes returning east when empty”.
GSF complained that this has the effect of applying higher than average surcharges on their most profitable routes. Its statement also highlighted that Maersk has introduced the surcharge 12 months before the rules requiring them to use surcharges come in.
GSF secretary general James Hookham said “Asking customers to contribute to new environmental costs is to be expected, but this charge lacks transparency; no data is available to let customers work out how the charge has been calculated. Given historical experiences with surcharges, shippers are naturally suspicious over something shipping lines say is ‘fair, transparent and clear'. GSF will be taking this piece of financial engineering apart piece by piece as we suspect this has more to do with rate restoration than environmental conservation.
“Maersk has other options. Global rules allow lines to meet air quality standards by fitting scrubbers to clean up exhaust emissions, rather than buying more expensive low sulphur fuel. This requires a one-off capital expense, but for shippers this is a better option than paying sulphur surcharges indefinitely. Some of Maersk's biggest competitors are taking this different approach, and customers will be looking at the options and voting with their wallets.
“What also disappoints shippers is the lack of negotiation about the timing and the structure of the charge. It would have been better if Maersk had discussed its plans with individual customers in the course of confidential contract reviews, rather than just publishing something that wouldn't be out of place in the puzzles section of your daily newspaper.
“We suspect that other shipping lines will be tempted to follow suit, but it would surely be of concern to competition authorities around the world if the same formula were to be used by other shipping lines, especially in the same Alliance.
“GSF would encourage Maersk to consult with customers and reconsider their strategy. These new charges may be all about low sulphur fuel, but they still stink to us!”
As previously reported, in order to offset its predicted US$2Bn in 2020 compliance-related fuel costs, Maersk is adding a bunker adjustment factor (BAF) surcharge onto its clients bills from 1 January 2019.
The charge is derived by calculating the average fuel price in “key bunkering ports around the world” along with a fuel consumption average that is specific to trade lanes and includes factors such as transit time, fuel efficiency and “trade imbalances between headhaul and backhaul legs”.
A statement from Maersk said the BAF surcharge is replacing its current standard bunker adjustment factor (SBF) surcharge and is designed to “enable customers to predict, plan and track how changes in fuel price impact the shipping freight rate”.
“Based on expected differences in price between current 3.5% sulphur bunker fuel and compliant 0.5% sulphur fuel, external sources estimate the additional cost for the global container shipping industry to comply could be up to US$15Bn. Maersk Line expects its extra fuel costs could exceed US$2Bn,” the statement said.
The operational realities of the 2020 sulphur cap will be discussed in detail at Riviera Maritime Media’s Asian Sulphur Cap 2020 Conference which takes place 24-25 October 2018 in Singapore.