Friday, June 24, 2011

APL To Adopt New Bunker Surcharge Formula in Transpac

Singapore-based ocean carrier APL announced Friday it would implement a new fuel surcharge formula in the transpacific trade reflecting cost savings and other financial impacts achieved by the carrier from slow steaming.

The new formula, which takes effect July 1, slightly lowers APL's current bunker surcharges from the current formula – which is based on a guideline from the Transpacific Stabilization Agreement.

APL offered two examples of bunker surcharges under the new formula:
The surcharge for a standard FEU shipped from Asia to the US West Coast drops from $568 to $538.

The surcharge for a standard FEU shipped from Asia to the US East Coast drops from $1,107 to $1,049.

APL also pointed out that under the current formula every $20-per-ton movement in fuel price resulted in a $20 surcharge adjustment for West Coast cargo. With the new formula, APL said the adjustment would only be $14. For East Coast cargo, the sensitivity is reduced from a $38 surcharge adjustment for every $20 per ton movement in fuel price to a $30 adjustment.

The carrier, which is the wholly-owned shipping arm of Singapore-based Neptune Orient Lines, said in a statement that the new formula was developed to reflect the cost savings as well as the added capital costs associated with slow-steaming – the practice of reducing vessel speed to reduce fuel consumption, control costs and reduce emissions.

As ships reduce speed, according to APL, additional vessels are generally required on each loop to maintain weekly arrival schedules.
“While not all our services are slow-steaming, many are,” Vice President of Pan-American Trades at APL Bob Sappio said.

“Considering the fuel consumption savings from slow-steaming, and the additional asset cost required, we have developed a more transparent approach, the result of which is some reduction in the cost but just as importantly, better visibility for our customers of the impact of slow-steaming.”

The carrier said that bunker surcharges will continue to rise and fall "in line with fuel price fluctuations."