Bunker surcharges to hit record levels
May 10, 2011
Container lines operating on the key Asia-Europe trade will pass on record bunker fuel costs to customers, despite many making savings from slow-steaming.
The average bunker adjustment factor (BAF) on the Asia-Europe trade has soared to its highest ever level.
Analyst Alphaliner said the average BAF charged by carriers on the trade was set to reach US$776 per teu this month, surpassing the previous record level of $766 per teu applied by some shipping lines in September 2008.
It added that bunker fuel prices were 30% higher this year compared with 2010.
However, shippers argue that savings made by carriers through the use of more efficient ships and slow-steaming initatives are not being passed on.
The average BAF calculated by Alphaliner is based on a survey of 12 carriers that have announced their surcharges for June. They range between $703 per teu, charged by NYK, to $832 per teu by MOL.
“BAF has remained a bone of contention for shippers, who argue that it is used by shipping lines to generate additional revenue,” said Alphaliner.
“Carriers maintain that it is used to recover additional bunker costs linked to unexpected fluctuations in the price of fuel.”
In theory, basic bunker costs are included in freight rates, while a BAF applies to changes above the base level.
“However, the application and calculation of the BAF surcharge have remained opaque, with widely varying formulae and base rates being used, while savings from slow-steaming and the use of more efficient ships are not fully passed back to shippers,” said Alphaliner.
“The carriers’ position on the surcharge weakened after some stopped charging BAF altogether for certain customers with all-in rates, while some applied what was called an Emergency Bunker Surcharge at levels significantly lower than the official BAF tariffs.
Between 2008 and 2011, average fuel prices have increased by 186% while average BAF charge to Northern Europe has increased by 227%, said the analyst.
