TSA to raise bunker surcharge to record level Monday

Liner carriers in the Transpacific Stabilization Agreement said Monday that their floating bunker fuel surcharge will spike to a record level effective Sept. 1.

The higher surcharge reflects record fuel prices that topped $767 per ton in mid-July, up from $500 at the beginning of 2008 and $296 at the beginning of 2007, TSA said in a statement.

TSA surcharge is adjusted monthly according to a formula that tracks world fuel prices at key loading locations.

Although fuel prices have been falling of late, each month's surcharge reflects average fuel prices during a reporting period 30 to 60 days earlier, said Bill Payne, NYK Line vice president and TSA revenue policy committee member. This is done to comply with U.S. law requiring a minimum 30 days advance notice to the market in the event a particular rate or surcharge is to be raised.

Carriers pay the higher fuel costs out of pocket as those costs rise, cushioning the impact on shippers, and then must pass them through after the fact, Payne said. The good news with a floating formula is that, as prices fall, customers will start to see savings 30 to 60 days out. The new fuel surcharges will be $1,886 per 45-foot container, $1,676 per high-cube 40-foot container, $1,490 per 40 footer, $1,192 per TEU and $33 per metric ton or cubic meter.

The TSA surcharge is posted by the carrier group as a guideline for the market, but service contracts with customers -- including bunker surcharge terms -- are addressed individually by the lines.

APL Senior Vice President Bob Sappio, also an RPC committee member, said that while carriers and shippers have made significant progress in agreeing on a floating fuel surcharge, much more work remains.If people think the high price of fuel is temporary they are mistaken, Sappio said. The transpacific trade is simply not sustainable as it is presently constituted. Carriers must recover a greater percentage of actual dollars spent on fuel. TSA members are: APL, K Line, China Shipping Container Lines, Mediterranean Shipping Co., CMA-CGM, MOL, COSCO Container Lines, NYK Line, Evergreen Line, OOCL, Hanjin Shipping Co., Yangming Marine Transport, Hapag-Lloyd, Zim and Hyundai Merchant Marine Co. 

Source: American Shipper