MSC axes surcharges

MSC will not publish any updates for its bunker utilisation contribution, piracy surcharge or Suez Canal surcharge from 1 June on the trade from Asia and Bangladesh to north Europe, Scandinavia, the Baltic, western Mediterranean, Adriatic, eastern Mediterranean, North Africa and the Black Sea.

A statement on its website said: “Surcharge levels published for the month of May have been rolled into the ocean freight [rate] and therefore, from June 1, the rate quoted by MSC on the above legs will not be subject to BUC, PRS and SCS.”

However, Dutch shippers’ council EVO has criticised the move. EVO supported cutting the number of surcharges, but wanted those that had a major impact on the overall cost of shipping or that are governed by Incoterms criteria to remain separate from the freight rate.

EVO spokesman Marco Wiesehahn said: “Reducing the number of surcharges used is certainly a thing EVO would support.

“Leading us in these types of discussions is the need for shippers to be able to distinguish a rate on the bases of Incoterms criteria.

“A shipper and consignee need to know what part of the total freight rate is related to deepsea transport itself, what part to terminal handling and what part to hinterland transport.

“Some shippers prefer further specification of their rates, but most are satisfied if this basic division is respected in invoices.

“As far as EVO is concerned, the major variable component of the freight rate, ie bunker costs, needs to remain transparent and retraceable and, accordingly, separately mentioned on the invoice.”

MSC’s bunker surcharge stands at $940 per teu, its piracy surcharge at $55 and its Suez Canal surcharge at $20.

Paris-based analyst Alphaliner said MSC’s fuel surcharge was the highest of the 17 carriers that publish a bunker adjustment factor on the Asia-Europe trade.

“With current spot market rates [including surcharges] on the Asia-Europe trade at around $650 per teu, the application of BAF/PRS/SCS would effectively have left MSC with negative freight [rate] of -$365 per teu,” it said.

Alphaliner research shows the average bunker charge of the other 16 carriers in May was $681 per teu, with a range of $540-$829 per teu.

“Although most of the carriers continue to publish BAF tariffs, they have effectively ceased to apply BAF on the Asia-Europe trade following the precipitous fall in spot rates on the trade,” said the analyst.

“Apart from four carriers — Maersk, CMA CGM, APL and Mitsui OSK Line — whose BAF surcharges were lower than $650/teu in May, the remaining 13 carriers would all have negative freight if they maintained their BAF charges.

“BAF [charges] are becoming increasingly redundant in the current volatile market, with frequent rate adjustments applied on practically a monthly basis.”

The news comes days after research from SeaIntel Maritime Analysis revealed the average bunker charge on the Asia-Europe trade was now higher than the average freight all-in spot rate published by the Shanghai Containerised Freight Index.

This means that if the bunker charge implemented by carriers is a fair reflection of their fuel costs, many carriers are transporting containers at a loss.

Carriers have published their own bunker surcharges since 2008, when the conference system ended; previously, a trade lane-wide bunker surcharge recommendation was published by the Far Eastern Freight Conference.

So far this year, all-in spot rates on the trade lane have been extremely volatile, reaching a maximum of almost $1,500 per teu in March before crashing to around $650 per teu nine weeks later.

This represents a decline of 56% since mid-March, raising questions over carriers’ second-quarter results.

To reverse the situation, carriers have announced a range of general rate increases of between $300- $1,000 per teu, due to come into force in July.

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