Container lines face dilemma over how much to charge for bunkers in Ukraine crisis: analyst

Container lines are grappling with the problem of how much to charge their customers for soaring bunker costs following the Russiathe invasion of Ukraineaccording to a leading industry analyst.

Global average VLSFO prices have increased $24.50/ton for $987/ton Tuesday, according to Ship and holdit’s G20 index prices at 20 major portsfrom $536/ton one year ago. Although container companies have the right to pass this cost on to shippers via BAFs, they may not want to, Lars JensenCEO of a consulting company Maritime Vespuccisaid in a LinkedIn post Tuesday.

“The curious element here is that the extremely high freight rates are already more than enough to cover the costs,” Jensen said.

“Carriers therefore have a choice; increase surcharges as usual and stoke shippers’ already burning feelings of price gouging and hidden collusion in an effort to preserve the spectacular financial performance already anticipated for 2022.

“Logically speaking, the BAF is not the issue – base rate, premiums, detention and demurrage and access to capacity are the real issues for shippers.

“Or remove (or freeze) the BAF in an effort to start repairing barriers with shippers in anticipation of a future normal where customer relationships start to matter again once ships are not fully full.

“And to alleviate some of the heavy political pressure on carriers to exploit the current situation.”

Previous Leaders cross political lines to hail high-achieving Indian women
Next Lessons a president learned from teaching high school students (opinion)