WTSA to more than triple fuel surcharges by October

Member shipping lines in the Westbound Transpacific Stabilization Agreement, reacting to the record rise in marine bunker fuel, have announced sizable hikes in shipping fuel surcharges that would reach $900 per 40foot container by Oct. 1.

The rates increases would be the second and third for the year. In February, WTSA members announced surcharges of $200 per FEU for wastepaper and $300 per FEU for agricultural products, chemicals, clay, forest products, hay, metal scrap, plastic scrap and freightallkinds mixed container shipments, effective April 1. Customers already paying this amount or more won't be affected.

The additional rate increases announced Monday will see surcharge rates rise across the board to $600 per FEU, or the full formula surcharge level in effect at that time, whichever is lower, on July 1. Starting Oct. 1, the surcharge levels would be raised to $900 per FEU or the full formula surcharge level. The group expects all tariff and contract cargo to be pegged to the WTSA full floating bunker surcharge formula by the start of 2009.

WTSA members have had bunker fuel surcharges in place for some time, based on an established formula that tracks fuel prices," said Brian M. Conrad, WTSA executive administrator. "They have been recovering only a fraction of those costs for a period of years, and they have now adopted a program to incrementally raise surcharges from the levels now paid to the full level."

Conrad said the increases are not a departure from the existing WTSA guideline surcharge calculation formula, but instead are an attempt to bring surcharge levels, where contract terms permit, closer in line with the formula. He added that the increase schedule was adopted to make the increases easier for shippers to absorb.

The WTSA surcharge formula does not attempt to recover carriers' entire fuel costs but rather to address fuel price fluctuations, such as those experienced during the past 18 months. Transpacific bunker fuel prices have spiked from $198 per metric ton at the beginning of 2005, to $295 at the beginning of 2007, to $530 per ton in midMarch of this year. Fuel accounts for half or more of the total fixed operating cost per transpacific sailing, the WTSA said.

WTSA members are APL, Hyundai, COSCO, "K" Line, Evergreen, NYK, Hanjin, OOCL, HapagLloyd and Yang Ming.

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