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Home » Container Lines Battle Shippers Over Bunker Surcharges

Container Lines Battle Shippers Over Bunker Surcharges

June 6, 2018
Maritime Executive

France's CMA CGM announced a $55/TEU surcharge for dry cargo, Israel-based ZIM introduced surcharges ranging from $18 to $65/TEU and the Mediterranean Shipping Company (MSC) announced an undetermined surcharge. Hapag-Lloyd and Maersk are reported to have made similar announcements to their customers.

Rising fuel bills driven by a 16 percent jump in Brent crude since the start of this year have come after a period of intense competition between container lines which drove down box rates, and the shipping companies are now struggling to recover their costs. But their customers have reacted sharply to the imposition of emergency surcharges, arguing their existing arrangements already account for variations in bunker prices.

"The use of emergency surcharges is a none-too-subtle attempt to impose non-negotiable charges on customers," said Chris Welsh, secretary general of the Global Shippers' Forum. "It is incumbent on container carriers to provide their customers with full transparency regarding bunker surcharge costs, and to explain why an emergency surcharge is warranted on top of existing bunker surcharge mechanisms."

The container lines typically allow for changes in fuel costs in their contracts with the bunker adjustment factor (BAF), a floating rate that rises and falls with bunker price assessments at key ports along their routes. Some of their customers have seen the additional emergency surcharges announced in May as an arbitrary cost imposed as a means of improving shipping companies' balance sheets after a disappointing first quarter.

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    KEYWORDS Global Logistics Global Supply Chain Management Logistics Logistics Outsourcing Ocean Transportation Regulation & Compliance SC Finance & Revenue Management SC Planning & Optimization Technology Transportation & Distribution
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