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CLECAT calls for transparency and dialogue on fair Bunker Charging during COVID 19 crisis

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CLECAT calls for transparency and dialogue on fair Bunker Charging during COVID 19 crisis

April 20, 2020 - 08:37
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Over the last two months, the liner industry has benefitted from a freefall in the price of very low-sulphur fuel oil (VLSFO), accelerated by the widespread economic impact of COVID-19.

The collapse of marine bunker prices came as a surprise soon after the steady rise in costs last year caused by the IMO 2020 low-sulphur regulation.

This should be good news for all those who have been hardly hit by reduced volumes and shrinking demand due to the impact of COVID-19 crisis. However, according to CLECAT (European Association for Forwarding, Transport, Logistics and Custom Services) the reality is different: Because of the one-to-two months lag in the calculation of bunker fuel surcharges, cargo owners and freight forwarders have not yet had a relief from the 35% drop in fuel prices of very low-sulphur fuel oil (VLSFO). The time-lag of adapting the fuel indexes is usually long when the fuel prices drop and short when the prices rise. Currently, with the drop of fuel prices, carriers are tied up to the bunker surcharge indexes based on high fuel prices.

Willem van der Schalk, President of CLECAT, commented on the concerns of the European freight forwarding community: „This gives rise to the suspicion that carriers are using the bunker adjustment factor – BAF - as a revenue-raising tool as well as a cost-recovery during the COVID-19 crisis.“ He continued: „Whereas freight forwarders understand that carriers are facing increased costs to secure continuity of services, all other parties in the logistics supply chain are facing disruption and fall-outs, not the least our clients, the shippers.“

CLECAT maintains that fair play and sharing of the burden should remain the guiding principle during the crisis. Van der Schalk: „We will continue to live in uncertain times for quite a while, but this should not prevent us from seeking to introduce higher levels of transparency in the calculation of fuel costs. This should be part of normal relationship and continuous dialogue between the parties in the maritime logistics supply chain.“