Home » Customs & Trade » APL cuts fuel surcharges using new slow-steaming formula

APL has announced a new fuel surcharge formula in the trans-Pacific trade that reflects the financial impact of slow-steaming, the industry-wide practice of reducing vessel speed to reduce fuel consumption, control costs and reduce emissions.

The Singapore-based container carrier said in a statement on June 24, 2011 that the new formula will result in a bunker surcharge that is lower than what it would be under the previous formula, which was based on a guideline from the Transpacific Stabilization Agreement.

With the new formula, the surcharge for a standard 40-foot standard container shipped from Asia to the U.S. West Coast drops to $538 from $568. The surcharge for a standard 40-foot standard container shipped to the U.S. East Coast drops to $1,049 from $1,107.

APL, a subsidiary of Neptune Orient Lines (NOL), said the new surcharge formula reflects the cost savings as well as the added capital costs associated with slow-steaming. As ships reduce speed, additional vessels are generally required to be added to each loop to maintain weekly arrival schedules.

“While not all our services are slow-steaming, many are,” said Bob Sappio, vice president of Pan-American Trades at APL. “Considering the fuel consumption savings from slow-steaming, and the additional asset cost required, we have developed a more transparent approach, the result of which is some reduction in the cost but just as importantly, better visibility for our customers of the impact of slow-steaming.”

The surcharge will continue to rise and fall in line with fuel price fluctuations, but the formula used to adjust the surcharge has been changed, APL said.

For example, until now, every $20-per-ton movement in fuel price resulted in a $20 surcharge adjustment for West Coast cargo. With the new formula, APL said the adjustment will only be $14. For East Coast cargo, the sensitivity is reduced from a $38 surcharge adjustment for every $20 per ton movement in fuel price to a $30 adjustment.

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