June 30, 2017 – The Transpacific Stabilization Agreement (TSA), a collaborative forum for ocean container shipping lines serving the trade lane between Asia and North America, will discontinue publishing its guideline formula for calculating fuel costs in a matter of days.
Beginning July 1, 2017, the TSA will offer only a single weekly average fuel price for the six million 40-foot containers that travel the lane annually. The impending change has caused various TSA members to file General Rate Increases (GRIs) to take effect on July 1, 2017.
“Shippers need a more accurate method for determining actual market fuel costs within the world’s second largest trade lane,” Daniel Cullen, Vice President of Advisory Services at Breakthrough, said. He explains, “The TSA West Coast calculated costs were an average across a trade lane and did not match market dynamics of benchmark port averages. The TSA’s formula lagged the market as prices changed over time.”
Due to changing market conditions and cost structures, the TSA determined it unrealistic to rely on a single guideline formula to calculate fuel costs and will begin to post weekly average fuel prices as a resource. The TSA will not continue to offer a benchmark formula that incorporates trade lane consumption characteristics such as average vessel size and transit time.
Energy management company, Breakthrough, offers a Marine Fuel Management solution to create transparency and consistency in fuel reimbursement practices such as these. The company’s precise fuel cost calculations are built upon knowledge of vessel efficiencies, trade lane distance and geography, transaction timing, taxes, and fuel prices.
Breakthrough offers an additional analysis of the change in the June 2017 edition of the Breakthrough Global Advisor Pulse, located on their website, www.BreakthroughFuel.com, in the Knowledge Center section.
Breakthrough is a groundbreaking energy management company, helping shippers around the world achieve transparency and remove distortion from their transportation supply chains. Using patented strategies and expert industry insights to improve supply chain efficiency, Breakthrough cuts energy costs and consumption while reducing emissions. In 2016, Breakthrough helped its clients save more than 6.3 million gallons of fuel and reduced their collective carbon footprint by more than 75 thousand metric tons of CO2. The firm has received the prestigious “Winning Through Innovation” award from Unilever and is a five-time recipient of Procter & Gamble’s “External Business Partner Excellence Award.” Learn more at www.BreakthroughFuel.com.
Phone: (920) 983-9700