TSA lines continue to play catch-up in cost recovery

TSA lines continue to play catch-up in cost recovery
Container shipping lines that carry cargo from Asia to the U.S. are still feeling the heat of high bunker fuel prices, even as weekly world prices have begun to show some easing.

Member lines in the Transpacific Stabilization Agreement (TSA) say the next recommended quarterly adjustment to bunker surcharges, to take effect on January 1, 2006, will bring those surcharges to US$590 per 40-foot container, a new high.

The reason is record high world prices paid by carriers at nine key global loading points during the 13-week calculation period, from August 26 through November 23, 2005. The steepest rise in bunker prices took place beginning last July, when prices rose steadily each week from US$275 per ton on July 21 to reach US$358 per ton by September 22. Containerization International reported a 25% price increase during third quarter 2005.

TSA adjusts its bunker surcharge according to a weighted average formula that tracks weekly marine fuel prices against member lines\' loading and consumption patterns across Agreement trade lanes. The calculation period is timed to give customers 30 days\' advance notice of each quarterly adjustment.

TSA surcharges are recommended guideline charges based on the calculation formula, as it reflects fuel-related costs. Lines implement the guidelines individually on a voluntary basis.

\"Customers understandably ask why surcharges are rising while fuel prices are going down,\" said TSA Executive Director Albert A. Pierce. \"The simplest answer is the calculation delay prevented carriers from recovering true fuel costs as they were going up, and if the current downward trend continues we should all see relief from high fuel costs in coming months.\"