TSA Defends "$228M Overcharge" Bunker Cost Calculation

TSA says it would be difficult to suggest carriers are profiting from the situation.

The Transpacific Stabilization Agreement (TSA) has defended it's bunker adjustment formula (BAF) following criticism from SeaIntel, who Sunday labelled it a "228M$ BAF overcharge."

"With the Panama Canal expansion came the introduction of much larger and more fuel efficient vessels on Asia-USEC. But the TSA’s official BAF formula still compensates carriers based on the smaller fuel-guzzling vessels," SeaIntel wrote in its latest newsletter.

Responding to the comments, Brian Conrad, executive administrator, TSA, says it is simply too early to make changes to the calculation.

"We do look at the formula from time to time, but the Panama Canal expansion has only just opened so it's a little early to be making assumptions about how it will impact carrier's bunker costs," Conrad told Conrad Ship & Bunker.

"We've also had no push from the customer base to make any immediate changes, and in fact, I believe that people prefer the stability of keeping the formula the same with periodic reassessments, as opposed to changing it every time there is some change in the vessel situation. Bear in mind also that the formula is a guideline, and it's still up to individual carriers and shippers as to what they negotiate in terms of their bunker charge.

"But that said, once things have settled down it may well be that reviewing the formula is appropriate."

Conrad also noted that, based on their latest financials, it would be difficult to suggest carriers are profiting from the situation.

"Rates have been going down and have been at their lowest for many years, so this is hardly a situation where carriers are raking in money at their customer's expense through the bunker," said Conrad.