Despite negative response from the shippers to the bunker
surcharge, CMA CGM Group, which includes ocean carrier APL, has raised
its emergency bunker surcharge (EBS) to $100 per teu for all deepsea cargo
movements from 1 December.
Introduced by the French carrier and a number of its peers on 1
June, in response to higher fuel prices, the controversial EBS was initially
set by CMA CGM at $55 per teu.
The charge varied between carriers, for instance Maersk Line’s EBS was $60 per teu, while MSC did
not publish its EBS and
referred to it as a “temporary measure”
Shippers questioned the validity of the word “emergency”,
alleging the container lines were attempting to claw back compensation for the
gradual rise in bunker costs over the past quarters. The European Shippers’
Council (ESC) in fact explained when such ‘emergency’ will be valid and
reasonable. It said: “The application of any emergency surcharge should be
reserved for events that cannot be foreseen (such as a crisis influencing the
availability of oil). In those situations, it would be unreasonable to have the
carrier bear alone the impact on the price of bunker fuel.”In practice however,
many shippers had contracts that were inclusive of bunker surcharges and were
therefore unaffected, while for spot business the EBS was gradually rolled up
into the freight rate
It is surprising therefore after the failure of carriers to make
their EBS notices stick to see that CMA CGM is persisting with its surcharge.
CMA CGM justifies its EBS hike based on the historical average
price of Brent crude in October. However, from its high of $86 a barrel last
month its price has fallen to a six-month low of $72, due to supply and trade
Meanwhile, most of CMA CGM’s peers are focusing on preparing
shippers for a surcharge to compensate for the higher cost of low-sulphur fuel
after the IMO’s new 0.5% sulphur cap regulations commence on 1 January 2020
Equally controversial, given the opaque nature of the carriers’
various low-sulphur fuel surcharge formulae, many shipping lines are proposing
to roll out their new bunker surcharge recovery mechanisms from 1 January next
year – some 12 months before the IMO regulations come into force.
Currently, heavy fuel oil (HFO), which ships consume in the main
legs of their voyages, is at around $450 per tonne,, whereas low-sulphur marine
gas oil (LSMGO) is $200 -$250 per tonne more expensive.
Some analysts predict the ‘spread’ could double come January
2020, but equally there are a few experts that suggest that the gap could
eventually be much narrower, given that in terms of supply and demand, the
majority of ships will need to consume low-sulphur fuel, with perhaps only 5%
fitted with exhaust gas cleaning scrubbers still requiring HFO.
They also put forward an argument that the higher demand for
low-sulphur fuel will induce more refiners to produce more, leading to
long-term decline in prices.