Maersk Line Makes Bunker Surcharges More "Accurate", Critics Say Less Transparent

Inaccurate BAF charges "can come back to haunt us as well as the customer," said Sterling

Maersk Line has ceased offering a publicly available Bunker Adjustment Factor (BAF) calculator amid changes to the way its BAF functions, but says the changes are not designed to profit from a slide in oil prices, ShippingWatch reports.

Until recently, Maersk Line's website included a BAF calculator allowing customers to calculate changes in the box shippers BAF charges given changes in the oil price based on a formula which Maersk Line says had been in operation for "some years".

But the carrier has made changes to the way it calculates its BAF and will no longer offer the calculator in what some customers are said to believe is an attempt to keep more of the savings from a low oil price by reducing transparency over pricing.

"Under no circumstance does this have anything to do with our method of calculating BAF," said Jacob Sterling, Head of Product and Change Management for Maersk Line.

"The point of the BAF is that if the price of oil, after we make a deal with a customer, goes up or down, then the rate will be adjusted accordingly within the contract period."

According to Sterling, BAF adjustments will be calculated by reference to Maersk Line's actual bunker expenses, rather than a formula driven largely by the spot price of crude oil, and will thus achieve greater "accuracy."

"If the bunker surcharge is not adjusted in an accurate way, this can come back to haunt us as well as the customer," he said.

In addition, he said Maersk Line will now revise its BAF quarterly, rather than monthly as before, and it will continue to publish BAF charges one month in advance of them taking effect, unlike competitors which do not publish their BAF charges at all.

BAF Inaccuracy Could "Haunt Us"

Monthly adjustments saw a lot of effort going into small adjustments, he said, so the change would free up time for its sales team to "discuss other things" with customers.

In November, Maersk Group CEO Nils Andersen said "falling bunker prices will be transferred to the customers, with some modest delays."

In December, Maersk Line's Asia Pacific CEO reiterated that the carrier was not profiting from lower fuel prices.

But others have since suggested the shipper stands to benefit hugely from lower oil prices.

In January, investment bank Nordea said current oil prices could mean as much as $2 billion in annual savings for the group.

Sterling conceded that "when we go out and make new deals with customers, we will always - just like every other company - try to get the highest price that the market can withstand.

"It's a question of supply and demand."

This month, Pacific shipper Matson said it had finished strongly in 2014 after benefiting from time lags between lower actual bunker costs and reductions to bunker surcharges collected from customers.