Maersk introduces new fuel surcharge formula
Maersk Line said Monday it is introducing a new method for calculating fuel surcharges.
The world’s largest container carrier said the new formula for its floating Bunker Adjustment Factor (BAF) aims to be “simple, fair and transparent” and will allow it to “share and recover the extraordinary costs” that now account nearly half of total vessel costs, up from 20 percent a decade ago.
Maersk noted fuel prices have tripled in the last three years, and today it is only recovering 55 percent of bunker charges via BAF surcharges.
“Naturally, this poses a significant exposure to Maersk Line, and traditionally we have tried to recover this via rate increases,” said Vincent Clerc, Maersk’s vice president for Pacific services.
“With Maersk Line’s BAF formula we will create more transparency, and our customers will experience a simple and fair way of applying BAF,” he said. “Amongst our customers, we see an increased understanding and acceptance of BAF as a floating mechanism, and our customers increasingly accept that we must share the extraordinary costs in a just way.”
Maersk said the new formula for calculating the BAF surcharge is built “on principles that are common in other transportation industries like airlines and parcel services. In these industries, prices and rates reflect fluctuations in fuel prices, and customers accept this as part of doing business in an industry, which is very reliant on fuel.”
The company said the formula will build on elements such as fuel consumption, transit time and imbalances of container flows, but it said “only changes in the oil price will entail changes in the BAF level. Our customers will therefore only pay the variation in cost, and although the BAF rises when fuel prices climb, they will also benefit from downward trends as the bunker price fluctuates.”
Maersk said various trades would phase in use of the new BAF formula beginning the first quarter of 2008. It expects all trades to implement the new system by the end of the year.
The company has created an online calculator for bunker charges that can be found here: http://baf.maerskline.com/