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Notice to all Shippers on Cargo fuel surcharges


Air Cargo Fuel Surcharge
The Civil Aviation Department has approved the filing of major airlines to adjust cagro fuel surcharges to not more than the following levels: long haul – HK$2.4 per kg, short haul – HK$1.2 per kg, effective 24 March 2009 onwards. While the Civil Aviation Department is handling the filings in accordance with pre-agreed operating procedures, shippers should note that airlines may be offering their own levels of lower fuel surcharges.

All rates--including fuel surcharges--are negotiable. The approved rates will set the ceiling, but not the bottom rates. When the market is at the shippers' favor, shippers could ask for lower rates (including surcharges). Asking for a discount is definitely within the negotiating process.

Ocean freight bunker rates
Container shipping lines previously relied on the conferences or agreements to set the bunker fuel rates. But with the European conference system that allowed carriers to set rates and surcharges collectively, coming to an end officially on Oct. 18, the lines have already started setting up their own formulas for bunker rate calculations.

TACA (Trans Atlantic Conference Agreement), for example, chose to close down earlier than the deadline, and has been non-existent since end of June while other conferences have stopped setting their collective rates altogether. Maersk Line introduced its own formula for calculating bunker adjustment fees in July while the Westbound Transpacific Stabilization Agreement (WTSA) has made changes in how it calculates guideline bunker fuel surcharges in the US-Asia freight market which it said is a simpler, more transparent formula for dry cargo and narrows the formula tiers. WTSA member shipping lines adopted the new formula on Oct 1, 2008.

As with air cargo, bunker adjustment rates are all within the discretion of the carrier you are dealing with and it is perfectly acceptable to seek the best possible rate for your cargo in the negotiation process.