Carriers Introducing ‘Emergency Bunker Surcharge’

Carriers Introducing ‘Emergency Bunker Surcharge’


5 minute read | By Denholm Good Logistics

Last updated: January 16, 2024 | Published: May 25, 2018


Shipping Lines have started to introduce Emergency Bunker Surcharges as the cost of Fuel increases.

Various shipping lines are in the process of implementing an additional Emergency Bunker Surcharge (by one description or another) due to the rise in fuel costs (fuel is a large component of the cost to ship containers).

The two largest shipping lines (Maersk Line and Mediterranean Shipping Company) have already announced their additional charges of $60/120/120 and $50/100/100 respectively, which they say will come into effect for all/most business as of 1st June. Hamburg Sud and Hyundai Merchant Marine (both of which work with Maersk and MSC in the 2M alliance) are also expected to implement Bunker surcharges of very similar amounts.

While the announcements by MSC and Maersk stated the aforementioned amounts will be charged on all shipments, we see signs that there may be mitigated amounts for Trade Lanes that particular carriers deem strategically important (e.g. Europe to Asia).

What other carriers will do has yet to be seen, any announcements will likely be made next week. It is safe to say that the vast majority of carriers will consider this opportunity to increase the rates after a March and April which saw general freight rates dive.

Overall in 2018, fuel prices have been increasing. Since the beginning of April until today (25th May) there has been a 21.3% increase in the Rotterdam IFO 380, spurred by the highest Brent Crude Oil price we have seen since 2014.

We have seen some reversal (or “resistance”) at the $80 per Barrel price in Brent Crude Oil, but with recent geopolitical events which are still playing out, it is hard to predict whether rates will stay around $80/Barrel for now, or increase even more.

Maersk stipulated that their Emergency Bunker Surcharge would be doubled if the Rotterdam IFO 380 increased to $530 and be voided if the IFO 380 reduced to $370. Looking at how the market has reacted in Q2, neither of these will be met in the next month (not accounting for further potential geopolitical events).

John Good Logistics is already in negotiations with carriers to manage the effect of any rate increases that may be passed on to us and our customers will be notified of changes as soon as possible.

Situation Update on 5th June (09:11 BST):

The Rotterdam IFO 380 (and Brent Crude Oil) price appears to have stabilised. In fact, analysing the short-term trend we have seen, it would appear the prices will now either stabilise or begin a reversal (particularly if Brent Crude Oil hits $74/Barrel within the next two weeks). In the case of a reversal/reduction in price, the price per barrel that the market will stabilise at would still depend on several factors and changes in the Geopolitical landscape (OPEC, US Shale and oil export, Venezuela, etc) would affect the trend.

Some carriers (e.g. Maersk) have stated that their Emergency Bunker surcharge will be voided if the Rotterdam IFO 380 falls to $370/Metric Tonne, which is possible if the Brent Crude Oil price falls to around $71 – $68 per Barrel. While we can imagine the Brent price falling that low if the market found the price was too high (we would expect to see this within the next two weeks if it were to happen), long-term trends suggest it is unlikely to fall this low without further geopolitical/commercial events which push prices down.


Situation Update on 8th June (14:24 BST):

The price of Brent Crude Oil suddenly collapsed at noon on the 5th, reaching $74/Barrel and then instantly rebounding to roughly the same value it had been. This would be one very important (dare I say reliable) “confirmation” that the “Floor”/”Support” price was $74/Barrel. If a price passes below the Floor, it will typically quicken it’s descent and sometimes enter a free-fall, depending on what it is.

Given the trading prices of Brent over the last few days, the Floor is now likely around $73.50/Barrel. The current price trend again shows signs of both stabilising and declining, were nothing to happen it would trade between $74 and $78 per Barrel (avg. of $76/Barrel) in the coming weeks.

Were the Brent Crude Oil price to decrease below $73.50 in the next 10 days, the price should shoot off to lower values in the short-term which could reach the approx. $71-68 price needed for the Rotterdam IFO 380 to again reach $370/mt (the trigger point for Maersk and some other carriers’ Bunker Surcharge to disappear).


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