CMA CGM extends emergency bunker surcharges

The new rate will be $55 per teu for dry boxes and $85 per teu for reefer containers

News ID: 80102

Date: 02 July 2018 - 15:13

Continuing rise in the price of bunker fuel behind move to extend surcharge to pass on cost to customere

CMA CGM IS EXTENDING ITS BUNKER SURCHARGE.

FRENCH container carrier CMA CGM will extend its moves to recover bunker costs through surcharges despite customer backlash about the way in which surcharges are being applied across the industry.

“A significant increase in bunker prices has been observed since the beginning of the year,” CMA CGM said. “Unfortunately, prices have continued to rise even more sharply recently.”

CMA CGM first announced a bunker surcharge at the end of May. The new rate will be $55 per teu for dry boxes and $85 per teu for reefer containers.

“Because bunker prices have remained high, the CMA CGM Group has decided to maintain these measures. Consequently, from July 1, these bunker-related surcharges, based on the average of bunker prices in May, will be applied to all long-haul cargo worldwide.”

Last week the European Shippers’ Council called on carriers to meet their customers to discuss real operational issues instead of resorting to new cost surcharges.

Commenting on a survey the ESC had conducted before carriers began to introduce surcharges, ESC secretary-general Nik Delmeire said: “It is disappointing that, even after the big reorganisation of container services following the start of new alliances, carriers still do not meet the expectations of their customers.

“At the time of the survey, the carriers’ emergency bunker surcharge, which we regard as customer unfriendly, was not yet in place, and it is reasonable to think that the results of the survey would be worse if it was done now.”

The ESC has also written to the European Commission to highlight its concerns about the wave of emergency bunker surcharges recently applied by container lines, arguing that their “almost simultaneous” introduction was “tantamount to price signalling”.

In a letter sent to EU commissioner for competition Margrethe Vestager, Mr Delmeire said the ESC had been informed by its members that most of the largest container liner companies had increased their freight rates on June 1 by adding an emergency bunker surcharge to the normal freight rate.

“Under the present circumstances, the use of such instrument is unjustified,” he said. “Oil prices had indeed been rising during the past month, but the latest hike cannot be assimilated to an emergency.

“Oil price fluctuations, up or down, had been frequently happening in the past years and no negative surcharge was applied when the barrel of oil went down to $40 some time ago.”

Nevertheless, fuel prices have been having an impact on carrier results. Last week German carrier Hapag-Lloyd warned it would have to reduce its earnings outlook for the year following an increase in operating costs.

The adjustment was the result of “an unexpectedly significant and continuing increase in the operational costs since the beginning of the year, especially regarding fuel-related costs and charter rates combined with a slower than expected recovery of freight rates”, the company said.