BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry



« News Home
:: Monthly Archive

News Topics
:: Air Pollution
:: Agreements & M&A's
:: Alternative Fuels
:: BunkerBlog
:: Cargoes & Storage
:: Company News
:: Efficiency, Costs & Charges
:: Environment
:: Events
:: Financial
:: Fuel Quality & Testing
:: Lubes & Additives
:: Oil Spills
:: People
:: Port News
:: Projects
:: Regulation, Legal
:: Services, Products,Technology
:: Statistics & Research
:: Vessels

Regional Archive
:: Americas
:: Asia/Oceania
:: Europe
:: M.East/Africa


BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
Home » News



Sulphur surcharges 'stink': Maersk BAF 'lacks transparency', says shipper group

Trade association reacts with 'suspicion' to Maersk's decision to change its BAF calculation.



Image credit: Elena Taranenko / Unsplash


Updated on 26 Sep 2018 00:19 GMT

The Global Shippers Forum (GSF) - a trade association for importers and exporters engaged in international trade - has reacted with "suspicion" to Maersk's decision to change its Bunker Adjustment Factor (BAF) calculation from the start of 2019 - one year ahead of the global cap on fuel sulphur content.

As previously reported, Maersk's new BAF will be calculated by multiplying the so-called 'trade factor' by the fuel price. The key elements of the trade factors, according to Maersk, are: the actual Maersk Line fuel consumption (tonne/FFE) per container moved on the trade; and an imbalance factor reflecting that, on some trades, there is a dominant headhaul, which will be subject to a larger share of the fuel cost changes than the backhaul.

And UK-based GSF argues that because the charge is per container, "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".

This, GSF says, results in higher-than-average surcharges being charged on Maersk's most profitable routes.

Furthermore, because the new BAF rates are due to become effective in January 2019, GSF accuses Maersk of deciding to "help itself to a whole year of higher fuel surcharges, a full 12 months before the rules requiring them to use surcharges actually come in".

James Hookham, GSF Secretary General, commented: "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!"






Related Links:

Maersk to change BAF calculation ahead of 2020 sulphur cap
Sulphur 2020: CMA CGM to review fuel surcharge policy
Freight association slams 'yet another surcharge' by box carriers
Denmark
United Kingdom

Latest News:

Risk minimisation in uncertain times | Geos Group
Bunker Energy takes over Maxcom Bunker's commercial activities
World Fuel Services to launch Pacific Northwest supply operation
Oil and fuel oil hedging market update
Brent remains in the $60s this morning
Oil and fuel oil hedging market update
$60s are hard to hold
Silverstream hails air lubrication uptake ahead of 2020
Oil and fuel oil hedging market update
OPEC, non-OPEC oil producers agree to cut 1.2m bbl/d
Aegean secures final approval for initial set of motions
MoU signed to test fuel gas and bunkering systems in Busan




Page Links:

Prices
Africa
Asia
Latin America
Middle East
North America
North Europe
South Europe
Index Summary
Price Highlights
Commentaries
Futures
Prices
Antwerp
Busan
Fujairah
Houston
Istanbul
Kaohsiung
Las Palmas
Maracaibo
New Orleans
Piraeus
Rio de Janeiro
Rotterdam
Santos
Singapore
News
Latest News
Blogs
Archive
Americas
Asia
Europe
Middle East
News
Air Pollution
Agreements & M&A's
Alternative Fuels
Cargoes & Storage
Efficiency, Costs & Charges
Environment
Events
Financial
Fuel Quality
Lubes & Additives
Oil Spills
People
Port News
Projects
Regulation/Legal
Services, Products, Technology
Statistics & Research
Vessels
Contact & Terms
Contact Us
Advertise
Terms & Conditions
Privacy Policy
Events
Upcoming Events