Transpacific Carriers Impose Fuel Surcharge

Members of the Transpacific Stabilization Agreement (TSA) operating to the U.S. from Asia said they were being hit by an ongoing wave of increasing inland fuel surcharges and rates from intermodal rail and motor carrier partners in the U.S. The carriers said they would begin assessing an inland fuel surcharge to recover “a portion of those costs from the customer base.”

The surcharges range from $40 per container for local and regional “Group 4” truck transport within California, Oregon and Washington and for East Coast local store-door delivery to $137 per container for mini-landbridge and inland point intermodal shipments. The surcharge will float in accordance with fluctuations to the U.S. Department of Energy (DOE) National Diesel Price Index using the Class 1 railroad historic baseline fuel price and tiers to trigger adjustments. The surcharge will be adjusted quarterly.

The Transpacific group pointed out that since the beginning of 2005, the price of a gallon of diesel fuel has risen 23% from $1.96 to $2.41. Long-haul and regional motor carriers are imposing fuel surcharges or increasing existing surcharges to recover these costs.

“Ocean carriers face a range of new charges from railroads and trucking companies aimed at addressing higher diesel fuel prices in the market,” said TSA Executive Director Albert A. Pierce. "Most have been introduced since the latest round of transpacific service contract negotiations concluded and the associated costs, while expected, were not fully known at the time or factored into carriers’ 2005-06 cost recovery plans.” Pierce adds that the challenge for TSA lines has been to develop a simple, comprehensive surcharge that adequately recovers costs.

The methodology inland carriers use to calculate the surcharge is a free-market process that closely parallels a proposed fuel surcharge provision that was removed from the recently passed surface transportation bill (HR 3). That provision would have instructed the U.S. Department of Transportation to set a mandatory fuel surcharge.

Commenting on the current inland surcharge calculations, TSA’s Pierce said, “It was determined early on that the lines would not reinvent methodology or complicate the process by extending recovery to areas such as empty equipment repositioning, which entails significant costs.” So to an extent we’ve sacrificed full cost recovery, in the interest of a simpler and a more comprehensive approach.”