Fuel Surcharges & Transpacific Shipping Outlook
Fuel surcharges have recently become a central topic in the container shipping industry, drawing attention away from tariff-related headlines. The ongoing conflict's ripple effects on Transpacific trade are being felt through rising bunker fuel prices — most notably as a result of the Strait of Hormuz closure, now entering its sixth week.
With more than 50% of Singapore's bunker fuel reportedly sourced through the Strait of Hormuz, suppliers at one of the world's largest bunkering hubs are under significant pressure, with some reporting less than a month of supply remaining. While fuel availability for ocean carriers in Asia remains manageable for now, pricing pressure is expected to directly influence container shipping costs and factor into ongoing contract negotiations. As witnessed, we have just received the first round of Bunker related pricing increases, in the form of the EFS or Emergency Fuel Surcharge. This EFS increased base costs $250 to $650 overnight.
Carriers have made clear they intend to pass fuel exposure downstream to shippers. However, the path to implementing Emergency Fuel Surcharges (EFS) has faced regulatory obstacles. Maersk filed requests on March 4 and March 11 to waive the standard 30-day notice period for EFS implementation — both were rejected by the FMC. The Chinese Ministry of Transport has also indicated it does not support the introduction of fuel surcharges at this time.
If carriers are unable to introduce EFS or EBS terms, they may instead incorporate these costs into their standard Bunker Adjustment Factor (BAF), adjusting monthly to reflect actual fuel costs. This approach could result in significantly higher BAF volatility than we have seen historically. We are monitoring BAF movements closely and will keep you informed of any material changes.
The carrier community has not yet reached a unified position, but a clearer consensus is expected to emerge over the next few weeks. We will continue to track developments and advise you proactively.
Please don't hesitate to reach out with any questions.
