One after the other, large shipping companies announce surcharges to their rates to be able to comply with the upcoming 2020 sulphur cap. The Global Shippers Forum (GSF) has reacted with suspicion after Maersk announced such a move.
Maersk introduces new fuel surcharge arrangements from 1 January 2019 to recover costs from the introduction of low-sulphur marine fuel from 1 January 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.
Higher than Average Surcharges
The GSF points out that 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. This has the effect of applying higher than average surcharges on their 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.
The Forum also feels it is unfair for Maersk to introduce the surcharges a full year before the new regulations actually come in.
Transparency Lacking
James Hookham, GSF Secretary General, said: '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.'
Other Options
'Maersk has other options, Hookham pointed out. '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.'
Tempted to Follow Suit
'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,' said Hookham. 'GSF would encourage Maersk to consult with customers and reconsider their strategy.'
Picture: Triple-E-Class M/V Maersk Mc-Kinney Møller (by Igor Mak).
