Shippers dispute new BAF calculation

ALAN PEAT THE LATEST bunker surcharge - previously known as a Òbunker adjustment factorÓ (BAF) - announced by the Europe SA Conference (ESAC) and applicable from November 1 has been condemned by the SA Shippers' Council (SASC) as being twice what it should be. This followed the launch last month of what the conference lines Ð Maersk Sealand, Safmarine, P&O Nedlloyd and DAL in the SA Europe Container Service (SAECS) and the multi-purpose carrier MACS - termed Òa fundamental revisionÓ to the method of calculating the bunker surcharge in the trade, and coming up with a surcharge per TEU, unlike the previous percentage added to the freight rate. It was, ESAC added, intended to provide Ògreater transparencyÓ after some three decades in which the bunker surcharge formula had remained a secret, known only to the conference members. But the release of the new formula has thrown a calculating cat amongst the pigeons. According to SASC executive director, Nolene Lossau, the council has done its own arithmetic using the figures produced in the latest ESAC review of the surcharge Ð but with one vital difference. The conference formula used a Òconsumption factorÓ of 1.0437-tonnes per general purpose (GP) TEU Ð refrigerated containers have a higher fuel usage and consumption factor (See ÒESAC calculationÓ) - in reckoning its latest fuel surcharge of US$210/TEU. That effectively means that just over a tonne of fuel is needed to ship a twenty foot container between SA and Europe or on the return southbound voyage. ÒBut,Ó said Lossau, Òour own calculation is very different.Ó This came to the conclusion that the maximum heavy fuel oil usage (ignoring the diesel used to power generators and the like on container vessels) for the vessels in the SAECS fleet would be 80-tonnes per day at 23-knots average cruising speed. ÒUsing this to work out our consumption factor,Ó said Lossau, Òwe calculated that only 0.5-t of fuel oil would be needed to transport each TEU. ÒThis would come up with a fuel surcharge of only US$100.56 Ð or a half of what ECSA lines are asking us to pay.Ó Calculation in a nutshell IN ITS calculation of the latest bunker adjustment factor (now termed Òbunker surchargeÓ by the lines) the Europe SA Conference (ESAC) came up with the following result. With effect from November 1, ESAC told FTW, its member lines will apply the following levels of bunker surcharge in the southbound and northbound trades: For GP Containers US$ 210 Per TEU For Refrigerated Containers US$ 298 Per TEU The calculation of these figures is as follows: Base Price* $/tonne Weighting $/t Fuel Oil Rotterdam 75.2 75% 56.43 Durban 83.4 23.28% 19.42 Diesel Oil Rotterdam 114.5 1.43% 1.64 Durban 240.1 0.28% 0.68 78.17 Current Price** Fuel Oil Rotterdam 270 75% 202.69 Durban 289 23.28% 67.39 Diesel Oil Rotterdam 526 1.43% 7.53 Durban 594 0.28% 1.69 279.29 Variance 201.12 Consumption Factors GP (dry) containers 1.0437 t/TEU 209.91 Regrigerated containers 1.4822 t/TEU 298.10 * Base Price is the average of October-December 1986 fuel prices for the corresponding grades of bunker, as used in the previous ESAC bunker surcharge formula. FO Rtm FO Dur DO Rtm DO Dur 380 cSt 180 cSt 07/07/2005 273 282 490 575 15/07/2005 254 269 490 555 21/07/2005 242 250 475 535 28/07/2005 245 257 477 540 04/08/2005 246 255 473 555 11/08/2005 267 278 510 590 18/08/2005 262 288 515 590 25/08/2005 276 290 540 605 01/09/2005 287 307 610 650 08/09/2005 293 341 565 649 15/09/2005 287 308 558 600 22/09/2005 293 326 564 630 29/09/2005 288 312 575 650 Average 270 289 526 594 For uncontainerised cargoes, a BUS of US$15 per freight tonne will apply.