Maersk raises shipping rates as oil price spike bites

The world’s biggest container shipping group Maersk Line told customers it is raising prices in response to increased marine fuel costs, showing how the surge in oil prices to their highest levels in four years is rippling through the global supply chain. 

With a share of about 19 per cent of seaborne freight, Maersk is seen as a barometer for global trade, shipping goods ranging from consumer electronics to beef and poultry. 

Bunker prices, as marine fuel is known, have risen more than 20 per cent since the start of the year, and in Europe have hit $440 per metric ton, the highest since 2014. That has forced Maersk to introduce an “emergency bunker surcharge”, the company told customers in a note. 

“This unexpected development means that it is no longer possible for us to recover bunker costs through the standard bunker adjustment factors,” Maersk said in the note.

The Danish group said that the average bunker price rose by 19 per cent in the first quarter.

The company’s shares have fallen as higher fuel prices have hurt its shipping business. Its total bunker costs rose to $1.2bn in the first quarter from $782m a year earlier, deepening losses at its continuing operations from $124m a year ago to $220m. 

The company said that with a surcharge of $120, a 40-foot container of dry — that is, non-refrigerated — goods from Rotterdam to Shanghai would cost 14 per cent more. 

“If you look at the emergency bunker surcharge, we are not planning to make money out of this, only cover costs,” said Antonio Dominguez, managing director for Maersk Line East Coast South America, one of the group’s major areas of operation. 

Oil prices are up close to 50 per cent in the past year, and Brent crude traded above $80 per barrel on several occasions in the past week. The factors that drove the recent rise, including uncertainty in the Middle East and a deep decline in Venezuelan production, are expected to continue. 

Maersk said that, should bunker prices continue to rise to $530 per metric ton, it would double the emergency surcharge. But if they declined to $370, it would lower it to zero.

Maersk is not the only shipping company to begin passing on the higher prices. Mediterranean Shipping Company, MSC, told customers in a note on Monday that the “situation is no longer sustainable without emergency action”. 

It said it was introducing a “worldwide temporary emergency bunker surcharge on all ocean and land-based cargo carriage with immediate effect” but did not give details. “Fuel prices are up more than 30 per cent this year, and almost 70 per cent since last June,” it said. “Prices in Europe exceeded $442/mt last week.” 

Maersk has suffered from the rising oil price, ironically, almost ever since it decided to sell its own petroleum business almost two years ago to concentrate on shipping and logistics. 

Maersk retains some benefit from a rising oil price through a 3.7 per cent stake it owns in Total, the French oil major, which bought its petroleum business for about $7.5bn in cash and shares. 

Soren Skou, Maersk’s chief executive, admitted earlier this month that the group had a “cost problem”. It is closing down some routes as well as introducing the surcharge. It is no longer the most profitable shipping line in the world after several years in that position, although it is the biggest by market share. 

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Maersk raises shipping rates as oil price spike bites

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