Carrier members of the Westbound Transpacific Stabilization Agreement will seek to add a surcharge on shipments related to the added cost of using low-sulfur bunker fuel within 200 miles of the U.S. and Canadian coasts.
The fee is set to be assessed from Oct. 1, and follows a similar move
by members of the Transpacific Stabilization Agreement, the eastbound counterpart of the WTSA.
Since Aug. 1, carriers have been subject to new International Maritime Organization regulations
that require cleaner fuel to be burned near U.S. and Canadian coasts to reduce vessel emissions.
WTSA said the fee will be $11 per FEU on shipments from the West Coast, and $38 per FEU from the East and Gulf coasts. It will be based on the same 13-week reporting period as the standard bunker charge and will be adjusted on the same effective dates.
According to the WTSA, the low-sulfur surcharge will be based on average weekly price differentials between standard bunker and low-sulfur fuel as reported by the price data reporting service Platt’s, a weighted average of WTSA carriers’ relative daily consumption of the different fuels, and average per-sailing days within the 200-mile emission control area (ECA) limit.
“The component is applied by backing out from the current bunker charge the number of sailing days within the ECA per voyage, at the fuel consumption rates and prices for standard bunker fuel, and then adding back in the number of days in the zone and costs based on average low-sulfur consumption and prices,” the WTSA said. “All other calculation variables used in the existing bunker charge formula remain the same.”
According to Platt’s, price differentials between standard bunker and premium low-sulfur fuel at the four key loading locations used to calculate the WTSA component – Los Angeles/Oakland, Seattle, Charleston and New York – ranged from $87 to $260 per metric ton as of mid-August.
“WTSA carriers accept the need for international standards aimed at reducing vessel emissions in coastal areas and in port,” said WTSA Executive Administrator Brian Conrad. “At the same time, the price tag is significant for a scheduled liner shipping services, in an industry with historically low margins and in a trade facing slow demand and depressed rates.
“The relative added cost per FEU aboard ship as reflected in the charge is not huge, but the overall cost impact per sailing across the entire trade is significant,” he added. “A further concern is the longer-term effect on low-sulfur fuel supply and prices following implementation of the ECA.”
Internal WTSA research on the price differential between normal and low-sulfur bunker showed that for every $20 per metric ton change in low-sulfur fuel prices, component levels rise or fall $5 to the West Coast, and $7 to the East and Gulf coasts.
WTSA members are Evergreen Line, Hanjin Shipping, Hapag-Lloyd, Hyundai Merchant Marine, "K" Line, NYK Line, OOCL, COSCO Container Lines, and Yang Ming. APL left the agreement Sept. 1. - Eric Johnson