The trans-Pacific group sets teeth on edge again
The low-sulfur bunker surcharge is also low in the popularity stakes
Hackles are rising over the 15-member “discussion” group, the Transpacific Stabilization Agreement, and its “discussion” that has led to an “adjustment” (when any authority speaks of an “adjustment”, you can be darn sure the price is going up) of the bunker charge of $17 per FEU to the West Coast; and $21 per FEU to the East and Gulf coasts.
It’s all because of the Emission Control Area (featured in a blog last month) and the use of low sulfur fuel. The hackles being raised are those of the customers of the 15 carriers, who are being saddled with the increase. They are putting pressure on the carriers to slack off; because the ECA is an international measure under the auspices of the United Nations imposed to make the world a better place and is not just another random, arbitrary tax dreamt up by Washington.
They are also looking very closely at lines that are not members of the TSA, to see if they’re shoving on a surcharge. In theory they shouldn’t be and in fact a couple of them are dithering as to whether to hold back, in the hopes of drawing away some spot market trade.
There is also some snorting of derision at the reasoning from the TSA. “Lines with scheduled services are also concerned about the spike in demand for low-sulfur fuel created by the ECA, and effects in the near and midterm on supply and price,” says Brian Conrad. “Not with two years warning of the ECA, there shouldn’t have been,” was the exact comment by an industry insider. “How come more depots and refineries have not become available,” says the insider, “and how come the carriers didn’t jump on the ports to get ready? Many of the ports are at least partly run by private companies, which should have had ample warning the ECA was on its way and, unlike ports run solely by government-related authorities, can jump onto projects much quicker.
“It’s just another case of the customer drawing the short straw.”
Europe went through a similar experience, with the number of low-sulfur depots doubling within two years.
The US industry is hoping that prices will drop once supplies are more readily available. Not that anyone reckons the TSA will remove the surcharge in a hurry.