New ocean cargo surcharges will be foul odor for many global shippers
Similar to the The European Shippers’ Council position, GSF feels that while shippers can be expected to contribute to new environmental costs, but this charge lacks transparency.
Transportation in the NewsPotential DSV acquisition of Panalpina takes a turn with Agility now in the mix FTR’s Trucking Conditions Index sees significant gain AAR reports mixed volumes for week ending February 9 XPO Logistics reports strong Q4 and full-year 2018 earnings results Chapter 11 filing and employee letter shed more light on NEMF’s bankruptcy development More Transportation News
Transportation ResourceeBook “Delivery: The New Moment of Truth.” Descartes has worked with a supply chain industry expert to create an eBook that explores how retailers are managing to meet their customers’ demands.
As reported in our news section last week, proposed surcharges from leading ocean cargo carriers are being met with the “disapproval” of The European Shippers’ Council. A much stronger reaction was announced by The Global Shippers Forum which says the idea simply “stinks.”
Based on the information released by Maersk, 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.
“But 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,” observes GSF Secretary General, James Hookham.
He adds that 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. In addition, Maersk has decided 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.
“And the new charging structure would apply to all variations of fuel price, not just due of the introduction of low sulphur fuel,” he says.
Similar to the ESC position, GSF feels that while shippers can be expected to contribute to new environmental costs, but this charge lacks transparency.
“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,” warns Hookham, who suspects that other carriers may be tempted to follow suit.
“These new charges may be all about low-sulphur fuel,” he concludes, “but they still stink to us!”
About the AuthorPatrick Burnson, Executive Editor Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]
Subscribe to Logistics Management Magazine!Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!
State of Global Logistics: Time for a reality check Preview some of the innovations you will see at ProMat 2019 View More From this Issue