Basis for bunker charge as published by the TSA (Transpacific Stabilization Agreement)

This is the basis listed by the TSA for the bunker charge

TSA Fuel Price-Bunker Charge Conversion Table

AverageBunker Charge for Next Quarter (US$)

Weighted Fuel Price
West Coast
spacer
East Coast/Gulf

(US$/Ton)

800.01 - 820
780.01 - 800
760.01 - 780
740.01 - 760
720.01 - 740
700.01 - 720
680-01 - 700
660.01 - 680
640.01 - 660
620.01 - 640
600.01 - 620
580.01 - 600
560.01 - 580
540.01 - 560
520.01 - 540
500.01 - 520
480-01 - 500
460.01 - 480
440.01 - 460
420.01 - 440
400.01 - 420
380.01 - 400
360.01 - 380
340.01 - 360
320.01 - 340
300.01 - 320
280.01 - 300
260.01 - 280
240.01 - 260
220.01 - 240
200.01 - 220
180.01 - 200
20'

551
540
529
518
508
497
486
475
464
454
443
432
421
410
400
389
378
367
356
346
335
324
313
302
292
281
270
259
248
238
227
216
40'

612
600
588
576
564
552
540
528
516
504
492
480
468
456
444
432
420
408
396
384
372
360
348
336
324
312
300
288
276
264
252
240
 20'

1077
1056
1034
1013
991
969
948
926
905
883
861
840
818
797
775
753
732
710
689
667
645
624
602
581
559
537
516
494
473
451
429
408
40'

1197
1173
1149
1125
1101
1077
1053
1029
1005
981
957
933
909
885
861
837
813
789
765
741
717
693
669
645
621
597
573
549
525
501
477
453



And this is what the TSA has stated is the recent costs for bunker fuel


Weekly Average Price Differentials
0.1% MGO Low-Sulfur vs. Standard Bunker Fuel

Week Of:

Nov 30
Dec 07
Dec 14
Dec 21
Dec 28
Jan 04 2016
Jan 11
Jan 18
Jan 25
Feb 01
Feb 08
Feb 15
Feb 22
USWC

271
261.5
253 
USEC/Gulf

213
200.5
188

Source: Bunkerworld

Reminder: Figures denote difference in price; as example, “100” means that at the load port in question, low-sulfur fuel cost $100/MT more than standard bunker fuel.

I guess if the bunker prices drop below 180 they will have to update their chart.

click here for link to their site






TSA delays rate increases

The Transpacific Shipping Association (TSA) is a not a conference (those are now illegal), but a
"rate discussion agreement".   Carriers who belong to it are allowed to share certain information,
and to discuss certain things regarding rates.   I am not sure what they can discuss, I think just
general things, not about specific customers.

Anyway, the administrator of the TSA keeps trying to "herd cats", getting all the carriers to
go in the same direction regarding rate increases, policy matter (ie; providing chassis), etc.
Of course if the TSA falls apart the administrator and staff will be out of a job, so they are
doing everything they can to demonstrate the need for their existence.

They have just issued new contract guidelines, delaying the previously announced rate increases
for contract negotiations.

Here it is.....

Managing Market Uncertainty
Sustained volatility in the Asia-US cargo market has delayed development of TSA's annual service contracting program for 2012-13. U.S. economic and retail indicators have remained uncertain, but suggest steady, gradual longer-term improvement in the coming year. As a result TSA lines delayed announcing a formal program of revenue/cost recovery guidelines until February 2012.
In the runup to May 1, 2012, when most new Asia-US service contracts take effect, TSA lines have recommended a schedule of interim, across-the-board rate adjustments aimed at restoring freight rates in the trade to roughly May 2011 levels, as a baseline for subsequent contract rate negotiations going forward. Interim increases include:
- US$400 per 40-foot container (FEU), effective January 1, 2012, with proportionate increases for other equipment sizes, for all tariff and applicable contract cargo.

- US$300 per FEU, effective March 15, 2012, for all tariff and applicable contract cargo.

- US$400 per FEU, effective April 15, for all remaining rates below May 2011 levels.
In addition TSA has announced its 2012-13 guideline revenue program, to take effect no later than May 1, 2012 for all carrier tariffs and service contracts.
Member lines have recommended that new baseline rates be raised by a minimum of US$500 per FEU for cargo to the U.S. West Coast, and a minimum of US$700 per FEU for all other destinations. Additional revenue and cost recovery initiatives will be considered later in the year, after a review of market conditions and outlook for the second half of 2012.

Carriers have further reaffirmed the need for 2012 service contracts to apply per formula rate increases for all equipment sizes, and to provide for collection of full, floating fuel surcharges and other applicable cost-based ancillary charges.
Finally, TSA lines indicated that they intend to apply a peak season surcharge (PSS) later in the year, with a duration and at an amount to be determined based on market conditions approaching the traditional summer and fall peak period.
The overall objective is to ensure carrier viability and service stability in a highly competitive and service-intensive freight market, by a) restoring rates to a baseline of a year earlier and then b) building on that platform in upcoming contracts to cover rising costs; to permit reinvestment in services and operations; and to provide a reasonable measure of profitability.

They say a lot more  boring things regarding how they came up with their formulas etc., trying to
convince either the carriers or their customers (or both, I guess), that they are doing a good job.

I presume what has happened is carriers have "broken ranks" on the previous agreed rate
increases and now the other carriers (through the TSA) are giving the impression the offending
carrier can now right the wrong.

What will really happen is all the carriers will try to get as much business locked up before the
new deadline, and then apologize later.

I guess they still haven't figured out it's all about supply and demand.  Rather than talking about
raising rates, they should be talking about decreasing tonnage.


 

TSA delays rate increases

The Transpacific Shipping Association (TSA) is a not a conference (those are now illegal), but a
"rate discussion agreement".   Carriers who belong to it are allowed to share certain information,
and to discuss certain things regarding rates.   I am not sure what they can discuss, I think just
general things, not about specific customers.

Anyway, the administrator of the TSA keeps trying to "herd cats", getting all the carriers to
go in the same direction regarding rate increases, policy matter (ie; providing chassis), etc.
Of course if the TSA falls apart the administrator and staff will be out of a job, so they are
doing everything they can to demonstrate the need for their existence.

They have just issued new contract guidelines, delaying the previously announced rate increases
for contract negotiations.

Here it is.....

Managing Market Uncertainty
Sustained volatility in the Asia-US cargo market has delayed development of TSA's annual service contracting program for 2012-13. U.S. economic and retail indicators have remained uncertain, but suggest steady, gradual longer-term improvement in the coming year. As a result TSA lines delayed announcing a formal program of revenue/cost recovery guidelines until February 2012.
In the runup to May 1, 2012, when most new Asia-US service contracts take effect, TSA lines have recommended a schedule of interim, across-the-board rate adjustments aimed at restoring freight rates in the trade to roughly May 2011 levels, as a baseline for subsequent contract rate negotiations going forward. Interim increases include:
- US$400 per 40-foot container (FEU), effective January 1, 2012, with proportionate increases for other equipment sizes, for all tariff and applicable contract cargo.

- US$300 per FEU, effective March 15, 2012, for all tariff and applicable contract cargo.

- US$400 per FEU, effective April 15, for all remaining rates below May 2011 levels.
In addition TSA has announced its 2012-13 guideline revenue program, to take effect no later than May 1, 2012 for all carrier tariffs and service contracts.
Member lines have recommended that new baseline rates be raised by a minimum of US$500 per FEU for cargo to the U.S. West Coast, and a minimum of US$700 per FEU for all other destinations. Additional revenue and cost recovery initiatives will be considered later in the year, after a review of market conditions and outlook for the second half of 2012.

Carriers have further reaffirmed the need for 2012 service contracts to apply per formula rate increases for all equipment sizes, and to provide for collection of full, floating fuel surcharges and other applicable cost-based ancillary charges.
Finally, TSA lines indicated that they intend to apply a peak season surcharge (PSS) later in the year, with a duration and at an amount to be determined based on market conditions approaching the traditional summer and fall peak period.
The overall objective is to ensure carrier viability and service stability in a highly competitive and service-intensive freight market, by a) restoring rates to a baseline of a year earlier and then b) building on that platform in upcoming contracts to cover rising costs; to permit reinvestment in services and operations; and to provide a reasonable measure of profitability.

They say a lot more  boring things regarding how they came up with their formulas etc., trying to
convince either the carriers or their customers (or both, I guess), that they are doing a good job.

I presume what has happened is carriers have "broken ranks" on the previous agreed rate
increases and now the other carriers (through the TSA) are giving the impression the offending
carrier can now right the wrong.

What will really happen is all the carriers will try to get as much business locked up before the
new deadline, and then apologize later.

I guess they still haven't figured out it's all about supply and demand.  Rather than talking about
raising rates, they should be talking about decreasing tonnage.


 

Market Musings: Wash, Rinse, Repeat!

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I had an opportunity to travel recently and get out from being tethered to the computer.  It is quite refreshing and good for the mind!

I am not a big fan of the Transportation Security Administration (TSA).  It is a big mis-allocation of resources.  The terrorists could have just as easily attacked a stadium filled with people as opposed to an airplane, and I am sure they are laughing at us because of the “shoe” and “underwear” bombers.  I believe in security and fighting the fight, but don’t you think that after 10 years this country can come up with a better way than patting down babies and grannies and having us dis-robe in public?  Let’s face it, TSA is a big jobs program.  It  not only is a mis-allocation of financial resources but a tremendous mis-allocation of all that human capital and potential.  It is sad.  I feel bad for the people that work there.

Warning sign!  Volume on the rally that saw the major indices recoup 2 months of losses in 8 days was modest but decreasing.  Volume the last 3 days has been above average and increasing.

I had a discussion with my wife about how tough things must be for college graduates these days.  What got the conversation going was our house sitter who is a recent college graduate from an elite, east coast liberal arts school.  She really cannot find work and she appeared to me to be a bit disillusioned about her prospects.  My wife served to remind me that when I graduated college (1980), things were pretty tough too.  It is funny, but at that time, I was hardly aware of them.  I was so focused on getting from point A (undergrad) to point B (medical school) in my life that the outside world hardly existed.  I knew nothing of the double dip recession from the early 1980′s or of 19% interest rates.  Essentially, I was clueless.  Actually, such reflections make me more positive about the current world we live in.  We will get by!

How about the move by gold and the gold miners?  The fundamentals are strong and the price action has been classic.  Wash, rinse, repeat!

Back to the TSA.  Walking through the airport, I saw a little boy wearing a “Jr. TSA Officer” sticker.  Gross.  Knowing how the government works, I am sure that decision wasn’t made without at least 17 meetings and multiple contract bids.  Regardless, why would you even let your child wear such a thing?  It is not like these are people worth emulating….”oh, I want little Johnny to grow up someday and be a TSA officer.”

And from Ben Bernanke this morning testifying before Congress: “The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support. The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.” Ahh, now I have the gold thing correct.

And today it is risk on with the Dollar down….nothing new.

One thing we noticed in our travels is the cost of a meal for two in a restaurant.  Checks are up some 30 to 40% at least.  I guess I will just eat my wife’s i-Pad.

Uh oh, oil just spiked.  Haven’t we seen this drill before?

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Don’t believe everything you hear

I don't known what to say. The Transpacific Rate Agreement has told it's members how much they should increase their rates. All this does is give ammunition to all the carriers to say " look, I will give you less than the other guys".

Moeller Maersk A/S, the world’s largest container line, and 14 other shipping companies agreed to seek rate increases of $400 per 40-foot box on Asia-U.S. west coast routes next year as the rebounding global economy revives cargo demand.

The planned increase is part of voluntarily guidelines covering talks for contracts generally starting around May 1, the Transpacific Stabililzation Agreement said in a statement on its website yesterday. The shipping group, which has limited antitrust immunity, also recommended a peak-season surcharge of $400 per box.

from bloomberg