2 min read
TSA’s Guideline Fuel Formula No Longer Available | Advisor Pulse
June 19, 2017
Share:
The Transpacific Stabilization Agreement (TSA), a collaborative forum for ocean container shipping lines serving the world’s second-largest trade lane between Asia and North America, has announced it will no longer publish its guideline formula for calculating fuel costs. Instead, the TSA will only offer a single weekly average fuel price for the six million 40-foot containers that travel the trade lane annually.
TSA member lines, including Maersk, MSC, and Hapag-Lloyd, “determined that rapidly changing market conditions, sailing characteristics and cost structures made it impractical to continue publishing a single TSA recommended guideline formula.” The TSA website further notes, “TSA lines will use the weekly average fuel prices as a resource, but may also factor in their own distinct costs and pricing objectives in developing their bunker charge policies which, in any event, have always been subject to individual adaptation.”
The TSA will offer only the weekly average fuel price moving forward. Precise fuel cost calculations require knowledge of vessel efficiency, trade lane distance and geography, transaction timing, tax and fuel prices.
The change to TSA member lines’ fuel pricing methodology comes while marine fuel costs are a clear focus for the industry. Bunker Fuel makes up most of an ocean carrier’s operating costs (as much as 75 percent) and carriers will likely experience upward price pressure soon. Container lines are preparing for the International Maritime Organization’s requirement for ships to burn low-sulfur bunker fuel starting in 2020. This regulatory change has, and will continue to make bunker fuel costs a talking point for the next few years, as it could cost the industry more than $50 billion.
Breakthrough expects this change will create more uncertainty in an already changing marine environment. Breakthrough offers a Marine Fuel Management solution designed to create transparency and consistency in fuel reimbursement practices. Learn more on our Solutions page or contact us to set up a call.
2 min read
April 23, 2024
Fuel Recovery and T-Fuel Fortify Energy Market Risk
Discover how Fuel Recovery and T-Fuel can transform your fuel price risk management strategy. Achieve budget certainty, maintain relations, and mitigate risk.
Read more4 min read
April 22, 2024
How to Improve Freight Procurement and Achieve Cost Savings
Learn how adaptive RFP processes can transform your freight procurement strategy to achieve cost savings, navigate disruptions, and improve ongoing compliance.
Read more4 min read
April 19, 2024
What the continuing Middle East conflict means for transportation supply chain costs | Advisor Pulse
Explore the profound impact of the Middle East conflict on the transportation sector, including an analysis of recent events and the resulting effects.
Read more