Liners accused of blatant profiteering as 90% variance in low sulphur surcharges is revealed

Liners accused of blatant profiteering as 90% variance in low sulphur surcharges is revealed

Low sulphur surcharges implemented by the world’s top liners from the start of this month vary by as much as 90%, according to research carried out by Aphaliner.

According to Alphaliner’s survey of the carriers’ surcharges on the Asia to North Europe route, the surcharges applied on December 1 range from a low by MSC at $71 per teu to a high from Hapag-Lloyd at $135 per teu.

The difference among alliance partners was stark given that these surcharges are likely for boxes sailing on partners’ ships. For instance, MSC’s 2M partner, Maersk, is charging $45 more per teu compared to its Geneva counterpart.

“The wide variations in the new fuel surcharge and lack of complete transparency on their calculations is bound to fuel shipper concerns of overcharging by carriers to compensate for lower freight rates,” Alphaliner warned in its latest weekly report.

James Hookham, secretary general of the Global Shippers Forum, urged clients of liners to question these new charges.

“Shippers should be challenging any surcharges demanded by shipping lines as a matter of routine but especially ones for low sulphur fuel over the next few weeks,” Hookham told Splash, adding: “These findings suggest that shipping lines’ approach to surcharges is no better than ‘if it’s January then it must be sulphur’. The only other person saying that with any confidence is Satan himself!”

Robert Keen, director general of the British International Freight Association (BIFA), suggested the divergent fuel prices was “blatant profiteering” by the liner community.

“Whilst freight forwarders have been anticipating increased costs as a result of the new rules around low-sulphur fuel, they do not believe that surcharges are the best response and believe that shipping lines should be factoring the increased costs resulting from the low-sulphur rules into their standard freight rate pricing mechanism,” Keen said, adding: “It is not as if the shipping lines have not known about these increased costs for a long time and should have been accommodating them into their business plans for 2020. If the Alphaliner research is correct, it suggests that the lines are plucking a surcharge figure from thin air and further supports our previous assertion that such surcharges are blatant profiteering by shipping lines determined to exploit the situation.”

Sunny Ho from the Hong Kong Shippers’ Council, who has long campaigned for fuel surcharges to be rolled into freight rates, urged containerlines to exercise far higher levels of transparency in how they came up with these new low sulphur costs.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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3 Comments

  1. Avatar
    Alf Ellis
    December 12, 2019 at 5:13 pm

    All of this is irrelevant. Whether the VLSFO surcharge is $1 or $500, it’s about the bottom line. those with higher BAFs have lower ocean freights and vice-versa.
    Last time I checked, there wasn’t a lot of profiteering going on in the liner trade!

    1. Avatar
      Rob
      December 12, 2019 at 9:41 pm

      100% correct. The bottom line figure is what matters most. In an environment where there is more capacity than cargo when one carrier takes action to gain share, others will follow suit. Adjustments to the base rates will be made to keep the total charge in line with the market.

      Each liner has a different method for cost calculation. If all the carriers’ bunker surcharge were the same, we would be reading an article about collusion.

  2. Avatar
    jim walsh
    December 12, 2019 at 9:41 pm

    “Liner C02 calculators branded useless”; are the lines using the same software they have in their CO2 calculators?