Singapore container shipping line APL has announced a new fuel surcharge formula in the Trans-Pacific Trade that reflects the financial impact of slow-steaming – the industry-wide practice of reducing vessel speed to reduce fuel consumption, control costs and reduce emissions.
The new formula results in a somewhat lower bunker surcharge, effective July 1, 2011, than would have been assessed under the previous formula which was based on a guideline from the Transpacific Stabilization Agreement.
Under the new scheme, the surcharge for a standard 40-foot standard container shipped from Asia to the US West Coast drops to US$538 from US$568. The surcharge for a standard 40-foot standard container shipped to the US East Coast drops to US$1,049 from US$1,107.
APL said it has developed the new surcharge formula to reflect the cost savings as well as the added capital costs associated with slow-steaming. As ships reduce speed, additional vessels are generally required to be added to each loop to maintain weekly arrival schedules.
“While not all our services are slow-steaming, many are,” said Bob Sappio, vice president of pan-American trades at APL. “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.”
APL said its surcharge will continue to rise and fall in line with fuel price fluctuations. But it’s changing the formula used to adjust the surcharge.
For example, until now, every US$20-per-tonne movement in fuel price resulted in a US$20 surcharge adjustment for West Coast cargo. With the new formula, APL said the adjustment will only be US$14. For East Coast cargo, the sensitivity is reduced from a US$38 surcharge adjustment for every US$20 per tonne movement in fuel price to a US$30 adjustment.
APL is a global container shipping business offering more than 80 weekly services and more than 500 calls at more than 140 ports worldwide.
APL is a unit of Singapore-based Neptune Orient Lines (NOL), a global shipping and logistics company.
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