'50% increase is way below
cost-recovery'
Alan Peat
IN A surprisingly silent move, all the shipping lines on the Far East trade have just bumped-up their bunker adjustment factor (baf) by 50% as the onerous oil price pushes their fuel costs beyond the level of absorption.
Both the Safari and the GEX conferences, and all the independent carriers, pushed up the baf (effective November 1) on all seafreight on the SA-Far East trade from US$100 to US$150 per TEU (twenty foot equivalent unit).
The surprising silence was that the decision (although apparently made between October 18 and 22) saw the lines missing out on their usual baf adjustment advertisements, each of the sea carriers being expected to inform its own client list of the new rates.
The immediate reaction from certain shippers was that the lines feared an accusation of collusion being levelled at them because of the mutual decision to increase the baf by the same amount at the same time.
But, FTW was told, this was not the case. It was rather the fact that, because all the lines were suffering the same high fuel costs, and following the same rate adjustment course, it was easier for each to assume its own responsibility for highlighting the increase.
And, a shipping executive added, the increase - although apparently large in a percentage form - was not even enough for the lines to catch up on the extra fuel costs of recent months. My own calculation, he told FTW, showed that if we were playing catch-up, the increase would have to have been US$188.
At the same time, all the lines on the SA-Europe trade also increased the baf - but by a moderate amount - from 12.07% to 12.80%. This trade, FTW was told, is always very conservative in its fuel price-driven increases.
This decision was made on October 26 by the conference secretariat in London.
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