Shipping lines that carry U.S. exports to Asia will add a new component to their bunker fuel surcharges to reflect the increased costs they face resulting from an international standard requiring the use of low-sulfur fuel when a vessel is operating within 200 miles of the North American coastline.
The Westbound Transpacific Stabilization Agreement, a carrier discussion group, said the new surcharge component, which takes effect on Oct. 1, will initially be $11 per 40-foot container from West Coast ports and $38 per-FEU from the East and Gulf Coast. It will be incorporated into the WTSA’s guideline bunker charge.
The low-sulfur component will be based on the average weekly price differential between standard bunker and low-sulfur fuel as reported by Platt’s, a weighted average of WTSA carriers’ relative daily consumption of the different fuels and average per-sailing days within the 200-mile emissions control area.
According to Platt’s, price differentials between standard bunker fuel and premium low-sulfur fuel at the four key loading locations used to calculate the WTSA component — Los Angeles/Oakland, Seattle, Charleston and New York — ranged from $87 to $260 per metric ton as of mid-August.
The United Nations’ International Maritime Organization established the North American Emissions Control Area effective Aug. 1 under the MARPOL Annex VI protocol. The U.S. and Canada are signatories to the protocol.
Shipping lines must burn low-sulfur fuel when their vessels are operating within the 200-mile zone in order to reduce harmful diesel emissions. Low-sulfur fuel is more costly than traditional bunker fuel.
Price differentials tracked by WTSA since Aug. 1 reveals that for every $20 per metric ton change in low-sulfur fuel prices, component levels rise or fall $5 to the West Coast and $7 to the East and Gulf coasts.
“As our member carriers have adjusted to comply with MARPOL Annex VI, the relative added cost per FEU aboard ship as reflected in the charge is not huge, but the overall cost impact per sailing across the entire trade is significant,” said Brian Conrad, WTSA executive administrator.
Conrad said WTSA will post weekly low-sulfur prices on its Web site in the coming month, along with instructions that will enable customers to calculate the likely component levels for the coming adjustment, as they do now for the bunker charge. It will be based on the same 13-week reporting period as the standard bunker charge and will be adjusted on the same effective dates.