Shippers are furious that low-sulfur IMO 2020 fuel surcharges introduced by lines vary so widely, even between carriers offering the same service within an alliance.
Container lines are acting with “opacity,” using “hidden formulas and no data backup” to calculate surcharges which they are using as an “opportunity to recover from low freight rates,” according to Jordi Espín, maritime policy manager at the European Shippers’ Council.
The surcharges have been introduced as carriers seek to recoup from customers the estimated $11 billion bill in higher fuel costs due next year because of the introduction of low-sulfur fuels that become mandatory under International Maritime Organization rules Jan. 1 (IMO 2020).
However, shippers and forwarders have consistently stated their bewilderment with the manner in which the fees have been levied.
High price fits all, claim shippers
Espin argues that IMO 2020 surcharges should trigger different, transparent charges for each customer based on the tailor-made services each receives.
“What it is not acceptable is that, once more, customers have to adapt to shipping lines’ requirements,” he told FrieghtWaves.
“Customers receive a warning notice about newer and higher costs but that doesn’t explain why the same service from the same alliance delivers different charges.
“There is no explanation why the shipping industry is behaving like this and why this new opportunity to build trust is again lost.
“This behavior may be legal, but it is not ethical and does not comply with a healthy code of conduct where partners with shared objectives and goals play on a common playing field.”
Espin was reacting to a survey by Alphaliner which found that low-sulfur surcharges (LSS) on the Far East to North Europe route applied by lines Dec. 1 ranged from $71 per twenty-foot equivalent unit (TEU) to $135 per TEU (see below).
The analyst claimed carriers were failing to provide details of how the individual surcharges were calculated. Alphaliner also failed to find any correlation between the relative efficiency of the various carriers based on the average size of vessels deployed and the surcharge applied by carriers.
“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 correctly predicted.
Alphaliner: liner charges lack consistency
Drewry also noted that “while tracking spot rates in December, we have witnessed a wide variation in IMO surcharges depending on different carriers, different forwarders and different trade lanes”.
Illustrating its point, Alphaliner said Ocean Network Express (ONE) was applying a surcharge of $92 per TEU – a figure lower than nine out of the 10 carriers on the Far East-North Europe trade, even though the company currently deploys the smallest ships on this route.
Even within the same alliances that operate similar size ships, the analyst said there were significant variations in the charges applied.
“For example, MSC (Mediterranean Shipping Company) applies a Global Fuel Surcharge of $71 per TEU while [2M Alliance partner] Maersk’s Environmental Fuel Fee is 63% higher at $116 per TEU,” said Alphaliner.
“Maersk’s surcharge is also higher than HMM’s Environmental Compliance Charge (ECC) of $112 per TEU, even though HMM does not currently operate any of its own ships on the trade.”
Drewry believes that IMO 2020 charges are being used by carriers to boost spot rates which, as FreightWaves has noted, also bolsters lines in annual contract negotiations with shippers on the Asia-Europe trade.
“Despite blank sailings, rates on the Asia-Europe trade have been low owing to weak demand,” said Drewry.
“Carriers are using IMO surcharges to lift spot rates, especially as annual contract negotiations are approaching.
“A few shipping lines like Hapag-Lloyd and CMA CGM have announced these charges – explicitly at $135 and $120 per TEU, respectively – whereas market leader Maersk chose to include it in its FAK rates.”
FreightWaves articles by Mike