Oil Down, Ocean Bunker Fuel Surcharges Up

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Sourcing Strategies

Just as oil prices are coming down, ocean bunker or fuel surcharges are reaching new highs. Why? Because of a US law that requires carriers to give a minimum of 30 days advance notice to the market prior to a particular rate or surcharge being raised. The industry therefore works on a rolling 30-60 period which means 2nd quarter oil prices are now feeding through into surcharges of US$ 767 per ton in mid July.

If the lower oil prices we have seen in the last two weeks prevail, we will see bunker fuel surcharges come down in the fall but the lines are still not happy with the fuel cost pass through suggesting they are picking up a portion of the extra costs when fuel costs rise. Bunker surcharges are addressed individually by lines and part of the line’s gripe may be large clients are avoiding some of the increases. Interestingly APL Senior Vice President Bob Sappio said, The trans-Pacific trade is simply not sustainable as it is presently constituted; carriers must recover a greater percentage of actual dollars spent on fuel.

So look for lower bunker surcharges in the fall, but they may not be coming down as fast as they went up.

–Stuart Burns

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