Note to Customers (May 2011)
Over the past year or two, many TSA carriers have engaged in the practice of “slow steaming,” also called “eco-steaming.” By reducing vessel speed on some voyages, slow steaming is intended to reduce carbon and other emissions and thereby reduce the environmental impact of oceangoing vessel operation. Slow steaming has already generated significant environmental benefits. Another benefit of slow steaming is a reduction in vessel fuel consumption as speeds are reduced.
Whether slow steaming ultimately results in cost savings for carriers will depend on a number of factors, including bunker price levels, vessel load factors, and vessel charter rates. A cost factor directly resulting from slow steaming is the asset cost associated with the deployment of additional vessels, which must be purchased or chartered, as well as accompanying container equipment. As part of their bunker charge analysis, the TSA carriers continue to evaluate the effects of slow steaming and what net savings may result, given changing market conditions.
A Revised Bunker Formula
Effective June 1, 2010, WTSA completed a transition begun in October 2008 to a modified bunker charge formula.
WTSA lines have effectively phased out ues of the previous formula in their individual tariffs and contracts. Accordingly, the Agreement has now phased out publication on this page of weekly average fuel prices calculated from Platt’s data, as well as the related matrix of charges under that formula.
We have retained historic fuel price and bunker charge data (below) that includes weekly prices and monthly adjusted charges under the old formula up to January 1, 2009, when the current formula, based on Bunkerworld data, was implemented.
The current formula provides for separate West Coast and East Coast/Gulf all-water bunker charges, which are adjusted on a quarterly basis for increased pricing stability. In addition, the formula includes separate components for dry and refrigerated commodities.
A WTSA Bunker Charge Fact Sheet has been posted elsewhere in this section under the “Fact Sheets” menu (a printable version is also available). It includes full calculation details; separate conversion tables showing fuel cost and charge tiers for dry and refrigerated commodities; an explanation of the price sensitivity analysis leading to creation of the tiers in both tables; and frequently asked questions. Users will be able to track weekly prices, and to calculate or verify new charge levels.
The charge is based on weekly Monday CS380 (or IFO380) bunker fuel prices at three loading ports – Hong Kong, Los Angeles and New York. These are obtained from independent oil industry data provider Bunkerworld, which constructs for WTSA average weekly West Coast and East Coast/Gulf prices using a straight average of:
Hong Kong + Los Angeles for the WC
Hong Kong + New York for the EC/Gulf
Weekly average prices will be posted on this page, or can be obtained from Bunkerworld at www.bunkerworld.com/markets/wtsaindex/
(Please Note: WTSA began using Bunkerworld as its fuel price data provider effective October 1; historical price data prior to September 1 posted on the URL above is for informational purposes only.)
Going forward, users will be able to simply:
1) Construct a quarterly average fuel price from the weekly averages during the 13 weeks ending 30 days before the charge effective date (prices from September-November, for example, determine the January 1 surcharge level).
2) Find the appropriate WC and EC/Gulf fuel price tiers in the WTSA formula index. These will in turn show the corresponding per-TEU and per-FEU charge levels (as with the existing formula, levels for high-cube 40′ and 45′ containers are the same as the per-FEU charge).
More detail about the underlying assumptions and mathematical calculations behind the new WTSA bunker charge formula can be found in the fact sheet.