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November 25 2019

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14 The Journal of Commerce | November 25 2019 International Maritime THE ACTUAL LOW-SULFUR fuel sur- charge cost per container shippers can expect to be applied to their spot market cargo on the major trades is finally beginning to heave into view. By the first week of Novem- ber, four major carriers had already announced in customer advisories that from Dec. 1, low-sulfur surcharges will be applied to containers shipped on both spot rates and all contracts with a duration of less than three months. Roughly half the containers on the Asia–Europe trade are carried under these short-term rates. Most carriers already have Bunker Adjustment Fac - tor (BAF) formulas in place for cargo shipped under longer contracts. While the surcharges all cover the additional cost of IMO 2020 compliant fuel, each carrier calls them by a different name. For Maersk Line, it is the Environmental Fuel Fee (EFF), Hapag-Lloyd is calling its surcharge the IMO 2020 Transition Charge (ITC), HMM has labeled its an Environmental Compliance Charge (ECC), and CMA CGM has gone with Low Sulfur Surcharge (LSS20). Of the four carriers, only CMA CGM and HMM gave an actual amount per container, with CMA CGM going as far as offering a useful low-sulfur fuel tariff calculator (cma- finder). Shippers can input origin and destination ports to get an actual low-sulfur surcharge per box being moved on that route, along with the usual breakdown of the multitude of other tariffs and charges involved in every ocean shipment. HMM outlined the low-sulfur surcharges it will apply on the various trades, while Maersk and Hapag-Lloyd on Nov. 1 announced a low-sulfur surcharge targeting the spot and short- term markets from Dec. 1, but did not specify an amount per TEU. Hapag- Lloyd said its surcharge is temporary, but Maersk said its EFF would only be reviewed if there were significant price fluctuations of more than $50 Starting blocks Market headwinds buffet newly formed DSV Panalpina By Greg Knowler Purchasing Managers Index (PMI) survey, the autos and parts sector continues to decline at the fastest rate of all sectors monitored. The decline in output, new orders, and exports in September was the slowest it has been in the last few months, so the auto slowdown may have bot- tomed out. IHS Markit is the parent company of The Journal of Commerce. DSV's large road division saw the market stall in the third quarter, largely a result of the weakening automotive business, with revenue declining 2.2 percent year over year to $1.1 billion. In the first nine months, revenue from road rose 1.5 percent to $3.5 billion. The DSV Panalpina ocean freight segment saw volume spike 41 percent in the third quarter, but the segment still grew 7 percent once Panalpina was excluded. DSV estimates the ocean freight market from January through September grew by 1 to 2 per- cent, with the trans-Pacific showing For the nine-month period, DSV Panalpina revenue grew 11 percent year over year to $9.6 billion. After adjusting for the Panalpina takeover, however, the growth for January through September translates to just 3 percent. The all-share DSV acquisition of Panalpina, which valued the company at $5.2 billion, has greatly expanded the company's global footprint, but that wider coverage also exposes the forwarder to continuing challenges in air and ocean markets. Hitting the brakes Chief among the poorly per- forming segments is air cargo, where weakness in the automotive industry is being felt acutely by all forwarders. While the company's air freight unit reported growth in volume of 63 percent for the third quarter, once Panalpina tonnage is stripped out, organic growth declined 6 percent. According to IHS Markit's Europe WEAKENING DEMAND IN global logistics markets through the third quarter limit- ed the performance of newly combined DSV Panalpina, but the company's first-ever joint result signaled the start of an integration journey that could take as long as two years. The company reported third quar- ter revenue of $3.6 billion, an increase of 16 percent year over year, mostly attributable to the Panalpina acquisi- tion from when the takeover closed Aug. 19. Organic growth for the third quarter actually declined 1.3 percent. Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics Initial assessment Carriers unveil first spot low-sulfur fuel surcharges By Greg Knowler Initial low-sulfur fuel surcharges on the major east– west trades range from 7 percent to 17 percent of the spot freight rate.

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