<div class="phx-topic abstract-wrapper"><p>Rio de Janeiro will be the first container port to benefit from Brazil’s $1.28 billion dredging program.
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Rio de Janeiro will be the first container port to benefit from Brazil’s $1.28 billion dredging program.

<div><div><img></div><p>Rio de Janeiro will be the first container port to benefit from Brazil’s $1.28 billion dredging program.</p><p>Edinho Araujo, head of the Special Ports Ministry in Brazil, has just signed a Reais210 million (US$70.54 million) contract with dredging companies Van Oord and Boskalis to deepen the navigation channels to the port of Rio de Janeiro.</p><p>The two Dutch dredging companies will carry out studies and soundings of Guanabara Bay over the next five months and complete the design for the channel and turning basin. The dredging work itself will take another six months to complete.</p><p>The deepening project, which will extend the allowable...

Rio de Janeiro will be the first container port to benefit from Brazil’s $1.28 billion dredging program. Edinho Araujo, head of the Special Ports Ministry in Brazil, has just signed a Reais210 million (US$70.54 million) contract with dredging companies Van Oord and Boskalis to deepen the navigation channels to the port of Rio de Janeiro. The two Dutch dredging companies will carry out studies and soundings of Guanabara Bay over the next five months and complete the design for the channel and turning basin. The dredging work itself will take another six months to complete. The deepening project, which will extend the allowable draft for ships to 14 meters from the current 12.4 meters, will allow larger ships to call at Brazil’s third-busiest container port. Container ships of up to 9,600-TEU capacity will be able to access Rio de Janeiro when the project is completed by mid-2016, providing shippers with greater economies of scale. Rio de Janeiro could provide an alternative for shippers on the Sao Paulo-Rio de Janeiro state border, an area that hosts hundreds of large exporters and key automobile exporters, including Volkswagon. “This development is great news for the port of Rio de Janeiro and for all those involved in the container sector here,” said Luiz Henrique Carneiro, president of Multi-Rio, one of the two container terminals operating in Rio de Janeiro. “This will allow us to handle bigger vessels of more than 9,000-TEU capacity, which is an increase of more than 50 percent over the 6,000-TEU ships we can handle today.” Carneiro said that in addition to the extra draft the dredging will provide, the project will permit the maximum length of vessel to rise from 295 meters to 340 meters, and the maximum beam to increase to 48 meters from the current 42 meters. Rio and Guanabara Bay, which includes the port installations of Niteroi as well as Rio de Janeiro, have an advantage over Santos and other major box ports in Brazil, he said. The port is not a river port, and therefore once dredged, the draft will be maintained naturally and won’t need frequent renewed, maintenance dredging. “The prospects for the Rio container terminals is very good now with this investment in dredging, but we do also need further investment in transport infrastructure, roads, etc.,” said Andre de Seixas, coordinator of the port users website. The Rio de Janeiro dredging contract is part of the National Dredging Scheme Part 2, which will see some Reais3.8 billion (US$1.28 billion) spent on dredging in Brazilian ports to allow bigger vessels to call along the east coast of South America. The first part of the dredging plan began in the early 2000s and paved the way for the bigger vessels calling today at ports in Brazil and on the east coast of South America. Meanwhile, at the port of Santos — Brazil’s biggest container port, which handled 3.685 million TEUs last year — the dredging process has hit snags over the past year. The Special Ports Ministry is now inviting bidders to come forward for a “third” tender, with a March 17 deadline for proposals. Two previous attempts failed because the government’s estimates of the costs were considered “uneconomical” by the international dredging companies whose bids were above the maximum amount the ministry was prepared to pay. With the currency, the Real, weakening against the dollar, the amount per cubic meter dredged will have risen so the ministry’s procrastination will cost them dearly. Contractors Boskalis, Van Oord, Dredging International and Jan de Nul are expected to submit bids. Previous tenders were for three years and the maximum contract price was Reais378.5 million, but now bidders are to offer a contract for a lower minimum, covering a period of only 17 months. The aim will be to dredge down from today’s 15 meters to 15.7 meters. The 10,900-TEU CMA CGM Tigris — 300 meters long with a beam of 48.2 meters —has been the largest container ship to call at the port of Santos, docking at Brasil Tecon Santos terminal. Prior to that, the biggest vessels were in the 9,000- to 9,600-TEU range. Brazilian pilots’ union, Conapra, has been lobbying Brasilia to restrict such big vessels calling at Santos because, its members claim, the draft is not sufficient to allow safe passage. They are calling for a 266-meter length restriction at Santos. Centronave, which represents foreign-flag shipowners in Brazil, sees this as a ploy for Conapra members to protect their monopoly status and their up to US$1million per year remuneration, which Brasilia is trying to cut back. Contact Rob Ward at rcward788@btinternet.com.

International ports

Rio de Janeiro port to begin dredging process

<div class="phx-topic abstract-wrapper"><p>The deal is the latest in a growing trend by cash-rich carriers to develop terminals, particularly in Asia and especially in Vietnam, as they move to secure access at key regional ports to gain preferential berthing rights and minimize delays. </p></div>

The deal is the latest in a growing trend by cash-rich carriers to develop terminals, particularly in Asia and especially in Vietnam, as they move to secure access at key regional ports to gain preferential berthing rights and minimize delays.

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<div class="phx-topic"><p>Mediterranean Shipping Co.’s Terminal Investment Limited (TiL) will broaden its network in Vietnam after being chosen as the majority shareholder of a consortium developing the $5 billion Can Gio international container port located south of Ho Chi Minh City. </p><p>The deal is the latest in a growing trend by carriers, supported by recent record profits, to develop terminals, <a href="https://www.joc.com/article/one-adds-to-asian-terminal-holdings-with-laem-chabang-deal-6195250">particularly in Asia and especially in Vietnam</a>, as they move to secure access at key regional ports to gain preferential berthing rights and minimize delays. </p><p>The consortium was selected by the Ho Chi Minh City people's committee this week for a 50-year concession to build and operate the facility, which will mainly target transshipment cargo. TiL will hold a 49% stake in the venture, while state-controlled Vietnam Maritime Corp. (VIMC) will have a 36% shareholding. Saigon Port JSC Corporation will hold the 15% balance. </p><p>The complex, covering 1,412 acres, will have the capacity to handle 4.8 million TEUs by 2030 spread across at least four berths capable of handling 20,000-TEU sized container ships. Plans call for the port to grow to 13 berths handling 17 million TEUs by 2047. Total berth length is almost 5 miles. </p><p>It will be TiL’s second major port project in Vietnam after its Hai Phong Port TiL International Terminal Company inaugurated terminals 3 and 4 at Lach Huyen new port in northern Vietnam a year ago. </p><p>Under the terms of its concession agreement with the Ho Chi Minh City government, TiL and its partners are prevented from selling the Can Gio terminal complex for 10 years and must complete the entire development within 20 years. </p><p>City officials hope the Can Gio port will spur the development of the area as an urban logistics and industrial hub in southern Vietnam, potentially competing with the Cai Mep port and industrial region 12 miles to the northeast. </p><p><i>Contact Keith Wallis at </i><a href="mailto:keithwallis@hotmail.com"><i>keithwallis@hotmail.com</i></a><i>.</i> </p></div>

Mediterranean Shipping Co.’s Terminal Investment Limited (TiL) will broaden its network in Vietnam after being chosen as the majority shareholder of a consortium developing the $5 billion Can Gio international container port located south of Ho Chi Minh City. The deal is the latest in a growing trend by carriers, supported by recent record profits, to develop terminals, particularly in Asia and especially in Vietnam , as they move to secure access at key regional ports to gain preferential berthing rights and minimize delays. The consortium was selected by the Ho Chi Minh City people's committee this week for a 50-year concession to build and operate the facility, which will mainly target transshipment cargo. TiL will hold a 49% stake in the venture, while state-controlled Vietnam Maritime Corp. (VIMC) will have a 36% shareholding. Saigon Port JSC Corporation will hold the 15% balance. The complex, covering 1,412 acres, will have the capacity to handle 4.8 million TEUs by 2030 spread across at least four berths capable of handling 20,000-TEU sized container ships. Plans call for the port to grow to 13 berths handling 17 million TEUs by 2047. Total berth length is almost 5 miles. It will be TiL’s second major port project in Vietnam after its Hai Phong Port TiL International Terminal Company inaugurated terminals 3 and 4 at Lach Huyen new port in northern Vietnam a year ago. Under the terms of its concession agreement with the Ho Chi Minh City government, TiL and its partners are prevented from selling the Can Gio terminal complex for 10 years and must complete the entire development within 20 years. City officials hope the Can Gio port will spur the development of the area as an urban logistics and industrial hub in southern Vietnam, potentially competing with the Cai Mep port and industrial region 12 miles to the northeast. Contact Keith Wallis at keithwallis@hotmail.com .

Port News

Container lines

Port infrastructure

Marine terminals

Container Shipping News

Maritime

MSC’s terminals arm extends Vietnam portfolio with new container port project

<div class="phx-topic abstract-wrapper"><p>The three liners saw their first-quarter revenues come in between 9% and 21% lower than last year amid sharply softer rates on the key Asia-US and Asia-Europe trades. </p></div>

The three liners saw their first-quarter revenues come in between 9% and 21% lower than last year amid sharply softer rates on the key Asia-US and Asia-Europe trades.

<div class="phx-topic"><p>Taiwan’s “Big Three” container lines all posted lower operating revenues in the first quarter amid the year-over-year decline in freight rates. </p><p>Evergreen Marine, the largest of the trio, recorded the steepest decline, with revenues falling 21% to $2.7 billion between January and March compared with $3.5 billion a year earlier, filings to the Taiwan stock exchange showed. </p><p>The figures reflected the first-quarter 2025 mini-peak in freight rates that was bolstered by strong cargo volumes, something that was absent in this year’s first quarter. </p><p>Evergreen has not yet disclosed its average rate per TEU or volumes for the first quarter, but rates on Asia-US and Asia-Europe trades, both key markets for the carrier, saw significant double-digit year-over-year declines in January and February. </p><div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="a2606c91-b30c-4219-b617-9491b44b6af1"></dynamic-object></div><p>Rates on Asia-US services were down more than 50% in January and about 25% in February before recovering in March, according to data from the Shanghai Shipping Exchange (SSE) carried on the <i>Journal of Commerce</i> Gateway platform. There was a similar decline on Asia-Europe freight rates in the January–February period before an uptick in March, SSE data shows. </p><p>Evergreen’s monthly revenue figures remain mixed this year. While revenues were down significantly in March at $872 million compared with $1 billion in January, the year-over-year decline eased over the first quarter, from 25% in January to 18% in March. </p><h3>Yang Ming Q1 revenue down 15% </h3><p>Yang Ming Marine Transport, Taiwan’s second-largest carrier, saw similar declines with revenue dropping 15% to $1.2 billion in the first quarter. The pace of decline also eased in the quarter, from a 22% year-over-year drop in January to 6% in March. </p><p>Highlighting the impact of falling freight rates, Yang Ming said average revenue per TEU fell to about $900 from more than $1,300 in the first quarter last year. </p><p>Intra-Asia-focused Wan Hai Lines, meanwhile, saw first-quarter revenue slide 9% to $1 billion. </p><p>The carrier said while intra-Asia freight rates have held steady, averaging about $500 per TEU, rates on its US services showed a significant decline year over year, from about $1,800/TEU in the first quarter last year to approximately $1,200/TEU this year. Rates on its South America services also eased to about $1,000/TEU from about $1,300/TEU. </p><p><i>Contact Keith Wallis at </i><a href="mailto:keithwallis@hotmail.com"><i>keithwallis@hotmail.com</i></a><i>.</i> </p></div>

Taiwan’s “Big Three” container lines all posted lower operating revenues in the first quarter amid the year-over-year decline in freight rates. Evergreen Marine, the largest of the trio, recorded the steepest decline, with revenues falling 21% to $2.7 billion between January and March compared with $3.5 billion a year earlier, filings to the Taiwan stock exchange showed. The figures reflected the first-quarter 2025 mini-peak in freight rates that was bolstered by strong cargo volumes, something that was absent in this year’s first quarter. Evergreen has not yet disclosed its average rate per TEU or volumes for the first quarter, but rates on Asia-US and Asia-Europe trades, both key markets for the carrier, saw significant double-digit year-over-year declines in January and February. Rates on Asia-US services were down more than 50% in January and about 25% in February before recovering in March, according to data from the Shanghai Shipping Exchange (SSE) carried on the Journal of Commerce Gateway platform. There was a similar decline on Asia-Europe freight rates in the January–February period before an uptick in March, SSE data shows. Evergreen’s monthly revenue figures remain mixed this year. While revenues were down significantly in March at $872 million compared with $1 billion in January, the year-over-year decline eased over the first quarter, from 25% in January to 18% in March. Yang Ming Q1 revenue down 15% Yang Ming Marine Transport, Taiwan’s second-largest carrier, saw similar declines with revenue dropping 15% to $1.2 billion in the first quarter. The pace of decline also eased in the quarter, from a 22% year-over-year drop in January to 6% in March. Highlighting the impact of falling freight rates, Yang Ming said average revenue per TEU fell to about $900 from more than $1,300 in the first quarter last year. Intra-Asia-focused Wan Hai Lines, meanwhile, saw first-quarter revenue slide 9% to $1 billion. The carrier said while intra-Asia freight rates have held steady, averaging about $500 per TEU, rates on its US services showed a significant decline year over year, from about $1,800/TEU in the first quarter last year to approximately $1,200/TEU this year. Rates on its South America services also eased to about $1,000/TEU from about $1,300/TEU. Contact Keith Wallis at keithwallis@hotmail.com .

Asia-Europe

Lower freight rates hit Q1 revenues for Taiwan’s ‘Big Three’ carriers

<div class="phx-topic abstract-wrapper"><p>Local BCOs are adopting a wait-and-watch strategy until there is greater clarity regarding cargo insurance costs and vessel passage through the Strait of Hormuz before committing to contract deals with carrier partners, sources say. </p></div>

Local BCOs are adopting a wait-and-watch strategy until there is greater clarity regarding cargo insurance costs and vessel passage through the Strait of Hormuz before committing to contract deals with carrier partners, sources say.

<div class="phx-topic"><p>Annual service contract negotiations on Indian westbound trades to the US for the 2026–27 year have thus far featured an unusually cautious approach by both ocean carriers and beneficial cargo owners (BCOs) amid uncertainty caused by the war in the Middle East, industry sources say. </p><p>Contracts typically begin May 1 and run through the following April. </p><p>“The contract season is starting with more flexible structures, shorter validity and increased interest in indexed or hybrid pricing models,” said Ashish Sheth, chairman and managing director of Sarjak Container Lines. “From a market standpoint, this could signal an inflection point where freight derivatives and index-linked contracts gain more traction and traditional annual contracting gives way to dynamic, risk-adjusted pricing strategies.”  </p><p>Amid massive trade volatility, most carriers are limiting new long-term contract deals to global BCOs who have consistently met their minimum quantity commitments (MQCs), according to multiple sources with knowledge of the matter. Local BCOs, meanwhile, are being offered “floating” price contracts in most cases.  </p><p>For India-US East Coast (USEC) shipper clients, floating contract prices are generally lower than the freight-all-kinds (FAK) accounts by between $150 and $300 per FEU, sources said. Theoretically, floating contracts allow carriers to adjust rates over time in line with the market reality.  </p><p>Hapag-Lloyd, Mediterranean Shipping Co. and CMA CGM are among major carriers considering more floating rate contracts in the current distorted market environment, according to multiple sources with knowledge of the matter. </p><p>Hapag-Lloyd is also said to be downplaying named account contract commitments — where the customers are typically listed — as part of a tweaked strategy, the sources said. The German liner, which recently <a href="https://www.joc.com/article/hapag-lloyd-to-invest-1-billion-across-indian-maritime-verticals-6189463">unveiled a $1 billion investment program for India</a> to cement its footprint in the country, commands the largest market share out of western India (Nhava Sheva/Mundra) for trades into the USEC, which is outside the Gemini Cooperation framework. </p><p>“Basically, the carriers want to structure a contract that’s then subject to a general rate increase and/or a peak season surcharge, but BCOs are unwilling to go along with such open clauses,” said a forwarder executive who didn’t want to be identified. </p><p>Sources also said there are indications that Maersk wants to engage in shorter-term, three-month rate contracts with local BCOs instead of annual contracts.   </p><p>Efforts to seek official comment from major carriers, including Maersk and Hapag-Lloyd, were unsuccessful. </p><h3>BCOs seek clarity </h3><p>Local BCOs are adopting a wait-and-watch strategy until there is greater clarity regarding cargo insurance costs and vessel passage through the Strait of Hormuz before committing to contract deals with carrier partners. </p><p>“We have decided to hold off for now [on contract talks],” said a supply chain executive at a Mumbai-based diversified conglomerate who didn’t want to be identified. “We do not want to lock ourselves into rates at the levels being indicated now.” </p><div class="wrapper-narrow"><dynamic-object type="jocchartid" resource-id="893ffa5c-0a69-45c7-a555-425e44318711"></dynamic-object></div><p>Meanwhile, with little demand support and more regular weekly sailings, India-USEC carriers have canceled rate hike plans previously scheduled for April, pushing FAK rates on the trade lane down by up to $500 over the past two weeks. FAK rates now stand at between $2,200 and $2,500 per FEU for European liners and about $2,100 for Asian operators, industry data shows. </p><p>Platts, a sister company of the <i>Journal of Commerce</i> within S&amp;P Global, put India-USEC spot rates at $2,450 per FEU as of April 13, essentially unchanged on the week. </p><p><i>Contact Bency Mathew at </i><a href="mailto:bencyvmathew@gmail.com"><i>bencyvmathew@gmail.com</i></a>.</p></div>

Annual service contract negotiations on Indian westbound trades to the US for the 2026–27 year have thus far featured an unusually cautious approach by both ocean carriers and beneficial cargo owners (BCOs) amid uncertainty caused by the war in the Middle East, industry sources say. Contracts typically begin May 1 and run through the following April. “The contract season is starting with more flexible structures, shorter validity and increased interest in indexed or hybrid pricing models,” said Ashish Sheth, chairman and managing director of Sarjak Container Lines. “From a market standpoint, this could signal an inflection point where freight derivatives and index-linked contracts gain more traction and traditional annual contracting gives way to dynamic, risk-adjusted pricing strategies.” Amid massive trade volatility, most carriers are limiting new long-term contract deals to global BCOs who have consistently met their minimum quantity commitments (MQCs), according to multiple sources with knowledge of the matter. Local BCOs, meanwhile, are being offered “floating” price contracts in most cases. For India-US East Coast (USEC) shipper clients, floating contract prices are generally lower than the freight-all-kinds (FAK) accounts by between $150 and $300 per FEU, sources said. Theoretically, floating contracts allow carriers to adjust rates over time in line with the market reality. Hapag-Lloyd, Mediterranean Shipping Co. and CMA CGM are among major carriers considering more floating rate contracts in the current distorted market environment, according to multiple sources with knowledge of the matter. Hapag-Lloyd is also said to be downplaying named account contract commitments — where the customers are typically listed — as part of a tweaked strategy, the sources said. The German liner, which recently unveiled a $1 billion investment program for India to cement its footprint in the country, commands the largest market share out of western India (Nhava Sheva/Mundra) for trades into the USEC, which is outside the Gemini Cooperation framework. “Basically, the carriers want to structure a contract that’s then subject to a general rate increase and/or a peak season surcharge, but BCOs are unwilling to go along with such open clauses,” said a forwarder executive who didn’t want to be identified. Sources also said there are indications that Maersk wants to engage in shorter-term, three-month rate contracts with local BCOs instead of annual contracts. Efforts to seek official comment from major carriers, including Maersk and Hapag-Lloyd, were unsuccessful. BCOs seek clarity Local BCOs are adopting a wait-and-watch strategy until there is greater clarity regarding cargo insurance costs and vessel passage through the Strait of Hormuz before committing to contract deals with carrier partners. “We have decided to hold off for now [on contract talks],” said a supply chain executive at a Mumbai-based diversified conglomerate who didn’t want to be identified. “We do not want to lock ourselves into rates at the levels being indicated now.” Meanwhile, with little demand support and more regular weekly sailings, India-USEC carriers have canceled rate hike plans previously scheduled for April, pushing FAK rates on the trade lane down by up to $500 over the past two weeks. FAK rates now stand at between $2,200 and $2,500 per FEU for European liners and about $2,100 for Asian operators, industry data shows. Platts, a sister company of the Journal of Commerce within S&P Global, put India-USEC spot rates at $2,450 per FEU as of April 13, essentially unchanged on the week. Contact Bency Mathew at bencyvmathew@gmail.com .

Middle East-linked market ambiguity clouds India-US service contract plans

<div class="phx-topic abstract-wrapper"><p>The customs agency will prioritize unliquidated entries in the first phase of the refund process that was instigated by the February Supreme Court decision to invalidate tariffs on most US trading partners.</p></div>

The customs agency will prioritize unliquidated entries in the first phase of the refund process that was instigated by the February Supreme Court decision to invalidate tariffs on most US trading partners.

<div class="phx-topic"><p>Refunds of tariffs paid under the International Emergency Economic Powers Act (IEEPA) will start April 20 under a phased rollout, according to US Customs and Border Protection (CBP). </p><p>The <a href="https://www.joc.com/article/cbp-lays-out-initial-tariff-refund-plan-that-requires-minimal-work-from-importers-6183418">refund process</a>, which will come as welcome news to importers, is being managed through a new tool, called Consolidated Administration and Processing of Entries (CAPE), that is being built within CBP’s Automated Commercial Environment Secure Data Portal (ACE Portal). </p><p>The <a href="https://www.joc.com/article/us-supreme-court-rules-against-trump-in-critical-ieepa-tariff-case-6173568">US Supreme Court ruled on Feb. 20</a> that the Trump administration improperly used IEEPA to justify widespread tariffs the US slapped on virtually all of its trading partners beginning in the spring of 2025. That decision shifted details on the refund process to the US Court of International Trade, which instructed CBP to avoid delaying refunds to US importers that had collectively paid more than $150 billion in IEEPA tariffs. </p><p>The first phase of the refund process prioritizes so-called unliquidated entries and liquidated entries that are fewer than 80 days old. A liquidated entry means CBP has completed the final assessment of duties, taxes and fees, making the entry legal and closed. </p><p>CBP has said that the refund process will take up to 45 days once a CAPE declaration has been filed, but the agency has issued no formal timeline for when refunds might actually land in the accounts of importers. </p><p>To apply for IEEPA tariff refunds, importers must either have an ACE portal account or an automated clearing house (ACH) account so they can receive the refunds. Customs experts have advised importers to set up both to avoid delays in the refund process. </p><p>If a customs broker or other third party is authorized by an importer to act as a notify party on a customs entry, and if the broker is set up to receive refunds electronically, that party can receive refunds via ACH on behalf of an importer. </p><p><i>Contact Eric Johnson at </i><a href="mailto:eric.johnson@spglobal.com"><i>eric.johnson@spglobal.com</i></a><i>.</i>    </p></div>

Refunds of tariffs paid under the International Emergency Economic Powers Act (IEEPA) will start April 20 under a phased rollout, according to US Customs and Border Protection (CBP). The refund process , which will come as welcome news to importers, is being managed through a new tool, called Consolidated Administration and Processing of Entries (CAPE), that is being built within CBP’s Automated Commercial Environment Secure Data Portal (ACE Portal). The US Supreme Court ruled on Feb. 20 that the Trump administration improperly used IEEPA to justify widespread tariffs the US slapped on virtually all of its trading partners beginning in the spring of 2025. That decision shifted details on the refund process to the US Court of International Trade, which instructed CBP to avoid delaying refunds to US importers that had collectively paid more than $150 billion in IEEPA tariffs. The first phase of the refund process prioritizes so-called unliquidated entries and liquidated entries that are fewer than 80 days old. A liquidated entry means CBP has completed the final assessment of duties, taxes and fees, making the entry legal and closed. CBP has said that the refund process will take up to 45 days once a CAPE declaration has been filed, but the agency has issued no formal timeline for when refunds might actually land in the accounts of importers. To apply for IEEPA tariff refunds, importers must either have an ACE portal account or an automated clearing house (ACH) account so they can receive the refunds. Customs experts have advised importers to set up both to avoid delays in the refund process. If a customs broker or other third party is authorized by an importer to act as a notify party on a customs entry, and if the broker is set up to receive refunds electronically, that party can receive refunds via ACH on behalf of an importer. Contact Eric Johnson at eric.johnson@spglobal.com .

Transport, Trade and Regulation News

Supply chain

First wave of IEEPA refunds to US importers to start April 20: CBP

<div class="phx-topic abstract-wrapper"><p>The doubling in bunker fuel prices in some key hubs since the war in the Middle East began six weeks ago is focusing industry attention on energy costs as supply scarcity worsens.</p></div>

The doubling in bunker fuel prices in some key hubs since the war in the Middle East began six weeks ago is focusing industry attention on energy costs as supply scarcity worsens.

<div class="phx-topic"><p>Elevated energy prices due to the war in Iran are complicating, and in some cases slowing, some annual trans-Pacific service contract negotiations between container lines and US importers as emergency fees push up container spot rates.  </p><p>Bunker fuel prices, which doubled in many key hubs in the days after the war in the Middle East began disrupting oil supply six weeks ago, have focused shippers’ attention on how the higher carrier operating costs will be passed onto them via bunker adjustment factors (BAFs) and emergency bunker fuel surcharges. Container lines can give few assurances on the limits to the higher costs their customers face as shipowners scramble to secure fuel supplies for May and June amid worsening scarcity.  </p><p>Still, there is little concern that the increased attention on the fuel component of freight rates will derail finalizing 2026–27 service contracts, which typically go in effect May 1. The last time attention to fuel — which is generally treated as a simple pass-through cost within contracts — complicated contract talks was in 2019, ahead of impending low-sulfur regulations.  </p><p>This year, the impact of the war has helped carriers secure higher rates than last year, even when fuel was excluded, two container line executives said. Unlike in past years when negotiated contract rates slipped in early March, one of the carrier executives noted his pricing power increased as the impact of the war widened. The war began on Feb. 28.  </p><p>But increased annual costs from labor, port tariffs and landside transport make most of the contract rate gains a wash compared with rate levels secured last year, the two executives said.  </p><p>Container spot rates, as measured by various indexes, have been rising steadily since late February and early March before ascending even higher in early April.  Emergency fuel surcharges began taking effect in the first week of April, following a 30-day review by maritime regulators. The cost to ship an FEU from Shanghai to Los Angeles hit $2,910 in the week ending April 9, a $900 increase from six weeks prior, according to Drewry’s World Container Index.   </p><h3>Higher pass-on costs  </h3><p>Container lines have imperfect means to recoup higher fuel costs and the additional costs accrued through disruption. BAFs can lag up to 90 days, hampering carriers’ cash flow in the meantime. US maritime regulators have prevented carriers from immediately implementing emergency surcharges, <a href="https://www.joc.com/article/fmc-again-rejects-maersk-petition-to-waive-notice-period-for-emergency-fuel-surcharge-6199261">forcing them to adhere to the 30-day notice period</a>, as required by US shipping law.  </p><p>The war has had minimal direct impact on container shipping, affecting just 1% to 2% of the total global capacity that typically transits the Strait of Hormuz. But the growing scarcity of bunker fuel in Asia has forced some ships to alter routings to refuel at alternative hubs, thus burning more fuel and accruing higher operating costs, a third carrier executive said. </p><p>The rejection by Chinese authorities of emergency bunker fuel surcharges has further complicated efforts by carriers to recoup higher costs from exporters in China. The severity of emergency surcharges varies by carrier, but all are easily in the hundreds of dollars to ship an FEU from Asia to the US West Coast.  </p><p>US importers shipping contracted cargo can also be subject to emergency bunker fuel surcharges even if language within their contract restricts such fees. That is prompting discussions during contract negotiations about just how much exposure cargo owners face from future fees.  </p><p>Shippers and forwarders are also trying to resist attempts by some carriers to calculate BAFs on a monthly rather than quarterly basis.  </p><p>“I can’t mask my frustration about this. The fuel charge in the contract becomes nothing more than a glorified [freight-all-kinds] rate,” a forwarder told the <i>Journal of Commerce</i>. “It nullifies our ability to get longer-term rates for purposes of stability and visibility.”  </p><h3>War volatility outstrips BAF </h3><p>A fourth carrier executive explained that the BAF was a “pre-war mechanism” that worked well when bunker fuel prices were relatively stable. But the recent surge in oil prices since March is adding literally <a href="https://www.joc.com/article/war-adding-40-50-million-per-week-to-hapag-lloyds-costs-ceo-6193532">millions of dollars a week to carriers’ costs</a>. </p><p>“When oil prices come back down — whenever that is — I don’t think anyone thinks that the price [of bunker fuel] will stay like this,” the carrier source said. “The rate will go back down to the pre-war rate.” </p><p>The second-quarter BAF shouldn’t be too onerous for most shippers since it will mostly reflect the far less volatile January and February fuel prices, said Jason Cook, chief executive of Ardent Global Logistics. A sustained period of higher fuel prices through March and into the second quarter, however, will mean much higher BAF charges are coming in the third quarter.  </p><p>Shippers may try to frontload third-quarter cargo throughout May and June to avoid paying the higher BAF, he said.  </p><p>“For the second quarter, the BAF should be pretty mild,” Cook said. “It won’t really show up until the third quarter.” </p><p><i>Contact Mark Szakonyi at </i><a href="mailto:mark.szakonyi@spglobal.com"><i>mark.szakonyi@spglobal.com</i></a><i>.</i> </p><p><i>Senior editors Michael Angell and Bill Mongelluzzo contributed to this report.</i> </p></div>

Elevated energy prices due to the war in Iran are complicating, and in some cases slowing, some annual trans-Pacific service contract negotiations between container lines and US importers as emergency fees push up container spot rates. Bunker fuel prices, which doubled in many key hubs in the days after the war in the Middle East began disrupting oil supply six weeks ago, have focused shippers’ attention on how the higher carrier operating costs will be passed onto them via bunker adjustment factors (BAFs) and emergency bunker fuel surcharges. Container lines can give few assurances on the limits to the higher costs their customers face as shipowners scramble to secure fuel supplies for May and June amid worsening scarcity. Still, there is little concern that the increased attention on the fuel component of freight rates will derail finalizing 2026–27 service contracts, which typically go in effect May 1. The last time attention to fuel — which is generally treated as a simple pass-through cost within contracts — complicated contract talks was in 2019, ahead of impending low-sulfur regulations. This year, the impact of the war has helped carriers secure higher rates than last year, even when fuel was excluded, two container line executives said. Unlike in past years when negotiated contract rates slipped in early March, one of the carrier executives noted his pricing power increased as the impact of the war widened. The war began on Feb. 28. But increased annual costs from labor, port tariffs and landside transport make most of the contract rate gains a wash compared with rate levels secured last year, the two executives said. Container spot rates, as measured by various indexes, have been rising steadily since late February and early March before ascending even higher in early April. Emergency fuel surcharges began taking effect in the first week of April, following a 30-day review by maritime regulators. The cost to ship an FEU from Shanghai to Los Angeles hit $2,910 in the week ending April 9, a $900 increase from six weeks prior, according to Drewry’s World Container Index. Higher pass-on costs Container lines have imperfect means to recoup higher fuel costs and the additional costs accrued through disruption. BAFs can lag up to 90 days, hampering carriers’ cash flow in the meantime. US maritime regulators have prevented carriers from immediately implementing emergency surcharges, forcing them to adhere to the 30-day notice period , as required by US shipping law. The war has had minimal direct impact on container shipping, affecting just 1% to 2% of the total global capacity that typically transits the Strait of Hormuz. But the growing scarcity of bunker fuel in Asia has forced some ships to alter routings to refuel at alternative hubs, thus burning more fuel and accruing higher operating costs, a third carrier executive said. The rejection by Chinese authorities of emergency bunker fuel surcharges has further complicated efforts by carriers to recoup higher costs from exporters in China. The severity of emergency surcharges varies by carrier, but all are easily in the hundreds of dollars to ship an FEU from Asia to the US West Coast. US importers shipping contracted cargo can also be subject to emergency bunker fuel surcharges even if language within their contract restricts such fees. That is prompting discussions during contract negotiations about just how much exposure cargo owners face from future fees. Shippers and forwarders are also trying to resist attempts by some carriers to calculate BAFs on a monthly rather than quarterly basis. “I can’t mask my frustration about this. The fuel charge in the contract becomes nothing more than a glorified [freight-all-kinds] rate,” a forwarder told the Journal of Commerce. “It nullifies our ability to get longer-term rates for purposes of stability and visibility.” War volatility outstrips BAF A fourth carrier executive explained that the BAF was a “pre-war mechanism” that worked well when bunker fuel prices were relatively stable. But the recent surge in oil prices since March is adding literally millions of dollars a week to carriers’ costs . “When oil prices come back down — whenever that is — I don’t think anyone thinks that the price [of bunker fuel] will stay like this,” the carrier source said. “The rate will go back down to the pre-war rate.” The second-quarter BAF shouldn’t be too onerous for most shippers since it will mostly reflect the far less volatile January and February fuel prices, said Jason Cook, chief executive of Ardent Global Logistics. A sustained period of higher fuel prices through March and into the second quarter, however, will mean much higher BAF charges are coming in the third quarter. Shippers may try to frontload third-quarter cargo throughout May and June to avoid paying the higher BAF, he said. “For the second quarter, the BAF should be pretty mild,” Cook said. “It won’t really show up until the third quarter.” Contact Mark Szakonyi at  mark.szakonyi@spglobal.com . Senior editors Michael Angell and Bill Mongelluzzo contributed to this report.

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