GSF: Maersk Urged to Reconsider New Fuel Surcharge Plan

MaerskIllustration. Image Courtesy: Pixabay under CC0 Creative Commons license

Danish shipping company Maersk Line needs to reconsider its plan to introduce new fuel surcharge arrangements from January 1, 2019, the Global Shippers Forum (GSF) believes. 

Earlier this month, Maersk Line said it would change fuel adjustment surcharge to recover presumed costs from the introduction of low-sulphur marine fuel from January 1, 2020.

The new charges, which are additional to agreed contract rates, are based on two factors – an average cost of fuel and a ‘trade factor’ that upscales the costs on head trades and discounts the fuel cost on reverse trades. But 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, according to GSF.

As explained, this has the effect of applying higher than average surcharges on the company’s most profitable routes. For example, the Far East to North Europe route has a trade factor of 1.3, but North Europe to Far East of 0.7.

In addition, the new measure comes twelve months before the rules related to the use of surcharges actually come in. What is more, the new charging structure would apply to all variations of fuel price.

“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,” James Hookham, GSF Secretary General, said.

“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,” Hookham continued.

He also reflected on the lack of negotiation about the timing and the structure of the charge.

“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,” Hookham further said.

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