Wednesday, March 25, 2009

TSA calculates bunker costs

The TSA (Transpacific Stabilization Agreement) web-site now details the basis they will use for calculating bunker surcharges, or bunker adjustment factors (BAF).
(UPDATE - I just realized they are calling this a bunker fuel charge. Next thing you know they will implement a ship cost charge.)

Personally, I think this exercise is mainly for the carriers to understand what they should be charging, more than for the customers.

Steamship lines have been making so much money the last few years, probably no one has been worried about their "cost accounting" guidelines. They have been more worried about finding space for all the cargo coming their way, and of course, with that whole supply/demand thing working, the rates just kept going up.

When the bottom fell out of the market, whoever set the prices just did their best, probably without having the tools to really know their costs.

In my experience, liner carriers aren't very good about cost accounting. Of course, it is very difficult because it depends so much on utilization of each sailing.
It's the same problem for the airlines. Difference is, people can be enticed by really cheap rates. Cargo isn't.

Cargo volume doesn't improve when you drop the rates. Carriers cannot (generally) drop the rates so low as to close the deal between buyer and seller.

The TSA did their whole calculation based on bunker oil around 740.00 per metric ton. Today the price is around 260.00 per metric ton.

They might have shot themselves in the foot.

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