ShippingWatch

Carriers reluctant to downgrade bunker surcharge after oil price decline

After the oil price dramatically declined Monday, ShippingWatch asked the major container carriers if the new bunker surcharge will be downgraded.

Photo: /ritzau/Christian Charisius

Container carrier customers should not celebrate too early, even if the oil price took a dive Monday morning.

Especially not if the response from Maersk, the world's largest container carrier, is anything to go by. After the three large European container carriers Maersk Line, MSC and CMA CGM announced emergency bunker surcharges due to the increasing oil price last week, ShippingWatch has asked whether this will be reduced after the significant oil price drop Monday morning.

From an approximate USD 79 price per barrel at the end of last week, the price opened Monday morning at around USD 75, after a fall of close to five percent.

In a written response, Maersk Line says:

"We are following the market trends closely and will adjust the tariffs as soon as the fuel price drops below the beginning level of the year. Should the bunker price (IFO380 in Rotterdam) decrease to a level of USD 370, EBS tariffs will be zero."

Maersk Line explains that the Emergency Bunker Surcharge (EBS) is being introduced because the price of fuel has increased dramatically since the beginning of the year and particularly in April and it then reached its highest level since 2014.

"With the bunker price currently exceeding 440 USD/ton in Europe, the bunker cost increase for Maersk Liner Business is more than 20 percent since the beginning of 2018," says the carrier.

Dubbed "illogical"

The carrier's alliance partner, Italian-owned carrier MSC, has declined to respond and points out that it has not yet determined the size of its surcharge. CMA CGM has not yet responded.

Maersk Lines' new surcharge, prompted by the rising oil prices, sparked criticism from one of the industry's leading analysts.

In a LinkedIn post, Lars Jensen, CEO of SeaIntelligence Consulting, writes that the emergency surcharge placed on shippers in addition to the regular bunker price is an illogical measure.

"Maersk Line and MSC [edit added: and now also CMA CGM] have introduced emergency bunker surcharges, and market rumors are that more carriers are about to introduce something similar," wrote Jensen, adding:

"But the implementations announced now are not logical and seem more to be fueled by a need to do something urgently, than a need to implement a logical structure to the surcharge. If these surcharges stick, we will be left with the jungle of surcharges becoming more illogical and intransparent."

English Edit: Lena Rutkowski

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