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July 9 2018

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www.joc.com Spotlight cap Carriers hold line on bunker fuel surcharges Global container carriers are holding the line on emergency bunker surcharges (EBS), offering global forwarders no flexibility in pricing as the carriers contend with rising operating costs, weak freight rates, and the unfolding US trade war with China and the European Union that threatens to cut volumes. With enormous and mounting financial pressure on most of the world's major shipping lines, forwarders tell The Journal of Commerce they are passing the bunker surcharges on to customers with carriers in no mood to negotiate. The bunker surcharges were rolled out June 1 on worldwide trades, and will be charged from July 1 on the trans-Pacific. "We are seeing this stick in the short-term market and also to an extent on existing agreements with carriers for smaller volumes," a European-based executive of a forwarder with offices worldwide said. The EBS announced by six carriers — CMA CGM, Hyundai Merchant Marine, Maersk Line, Mediterranean Shipping Co., Zim Integrated Shipping Services, and Ocean Network Express — range generally from $55 to $60 per TEU. Hapag-Lloyd instead is seeking an operations cost surcharge that was implemented on June 15 but not for China exports. A global forwarding executive based in Shanghai said the surcharges were sticking and the additional costs were being passed on. "Some customers do understand, some don't. So far it is a mixed picture," he said. One of those who doesn't understand is Nik Delmeire, secretary general of the Brussels-based European Shippers' Council. In a letter to the European Commission, he called the surcharge unjustified and said that although oil prices had risen during the last month, the latest price rise did not constitute an emergency. "Oil price fluctuations, up or down, had been frequently happening in the past years, and no negative surcharge was applied when the barrel of oil went down to $40 some time ago," he said, adding that the application of an emergency surcharge should be reserved for unforeseen events, such as a crisis influencing the availability of oil. Lars Jensen, CEO of SeaIntelligence Consulting in Copenhagen, said carriers are under severe financial pressure and had to increase their prices. "They can call such an increase by many names; now they have chosen to call it EBS," he wrote in a LinkedIn post. Although carriers appear to have had success initially in implementing the emergency bunker fuel surcharges, their ability to maintain the surcharges in the coming months is questionable because the price of oil came down and has leveled off following the 10 percent spike in May, said Michael Klage, solutions director at TOC Logistics International. "I believe the surcharge will stick on new pricing and/or ad hoc quoting, but will be mitigated in full or in part on named-account, fixed- rate contracts," Klage said. Carriers in the coming weeks must choose between walking away from their contracted business by sticking with the surcharges, or maintaining this business by keeping their contractual commitments, he said. Executive Editor, The Journal of Commerce and JOC Events: Chris Brooks 609 649 2181, chris.brooks@ihsmarkit.com Executive Editor, The Journal of Commerce and JOC.com: Mark Szakonyi 202 872 1234, mark.szakonyi@ihsmarkit.com Managing Editor: Barbara Wyker 908 777 3217, barbara.wyker@ihsmarkit.com Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202 872 1228, bill.cassidy@ihsmarkit.com Bill Mongelluzzo West Coast 562 428 5999, bill.mongelluzzo@ihsmarkit.com Hugh Morley Northeast, Mexico 646 679 3475, hugh.morley@ihsmarkit.com Eric Johnson Technology 213 444 9326, eric.johnson@ihsmarkit.com Greg Knowler Europe Editor, Maritime & Trade, IHS Markit +44 7976798770, greg.knowler@ihsmarkit.com Turloch Mooney Global Ports, Maritime & Trade, IHS Markit +852 9011 9109, turloch.mooney@ihsmarkit.com Associate Editor: Ari Ashe Southeast Ports, Intermodal Rail 202 548 7895, ari.ashe@ihsmarkit.com Web Editor: Joseph Lazzaro 917 309 0148, joseph.lazzaro@ihsmarkit.com Data Analyst: Dustin Braden 646 679 3450, dustin.braden@ihsmarkit.com Senior Content Editor: Alessandra Gregory Barrett, 860 248 5238 alessandra.barrett@ihsmarkit.com Senior Designer: Sue Abt, 862 371 3534, sue.abt@ihsmarkit.com Designer: Bryan Boyd, 908 910 7849, bryan.boyd@ihsmarkit.com Publisher: Tony Stein, 770 295 8809, tony.stein@ihsmarkit.com Sales: Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954 551 8305 Zachary Gorman, Account Executive Northeast, Illinois sales 646 679 3466 Jean Gibbons, Senior Sales Executive West Coast, Midwest sales, 706 469 7160 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Alex Remstein, Associate Sales Specialist Reprints/Classifieds/Copyrights, 646 679 3418 For Magazine Subscription Customer Service: www.joc.com/help 450 West 33rd St., 5th Floor, New York, N.Y. 10001 973 776 8660 • 800 952 3839 Executive Director, Editorial Content, Maritime & Trade, IHS Markit, Peter Tirschwell Executive Director, Media & Events, Maritime & Trade, IHS Markit, Amy Middlebrook Manager, Production, Carmen Verenna Product Manager, JOC, Jesse Case ©2018 The Journal of Commerce — All Rights Reserved For more information, visit our website, www.joc.com. 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