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Domestic shipping lines have started sending notices to clients on the imposition of bunker fuel surcharge due to increasing global oil prices and limited supply brought by the ongoing tensions in the Middle East
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The Philippine Liner Shipping Association said its member shipping lines “will be constrained” to implement the adjustment to cover increased fuel cost
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Other shipping lines have also sent their advisories to clients about the imposition of bunker fuel surcharge
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Passenger and cargo rates in the domestic liner shipping industry have been deregulated since 2004 but shipping lines are still required to notify MARINA and the public of any subsequent upward rate adjustment two weeks prior to effectivity
Domestic shipping lines have started sending notices to clients on the imposition of bunker fuel surcharge due to increasing global oil prices and limited supply brought by the ongoing tensions in the Middle East.
The Philippine Liner Shipping Association (PLSA) in a letter dated March 3 notified the Maritime Industry Authority (MARINA) that its member shipping lines “will be constrained” to implement an upward adjustment in freight–in the form of bunker fuel surcharge–to cover for the “sudden surge in global fuel prices due to the continued escalation of tensions in the Middle East and the uncertain indication yet of the potential scale and timeframe of the conflict.”
Passenger and cargo rates in the domestic liner shipping industry have been deregulated since 2004 through Republic Act No. 9295 (Domestic Shipping Development Act of 2004), but shipping lines are still required to notify MARINA and the public of any subsequent upward rate adjustment two weeks prior to effectivity.
PLSA in its notice letter said the upward adjustment – rates of which will depend on the individual shipping lines’ operating costs – will be effective from March 20 onwards.
In a subsequent letter dated March 4, PLSA informed MARINA that its member lines will be forced to effect the upward adjustment within seven days upon issuance of notice to clients/shippers/consignees “owing to the very volatile situation where purchase of fuel for marine operations has already been restrained and controlled…”
However, MARINA asserted the observance of the two-week notice in a response letter dated March 5.
Aside from PLSA members, other shipping lines have also sent their advisories to clients about the imposition of bunker fuel surcharge.
READ: Local shipping lines raise passenger, vehicle, cargo rates
According to PLSA, fuel accounts for about 30-40% of a vessel’s operating cost.
Iran has closed the Strait of Hormuz following the U.S. and Israel’s recent attacks on the Middle East country, threatening to fire at vessels that pass through.
The Strait of Hormuz, located between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It handles the world’s largest crude oil tankers, and it is the world’s busiest oil shipping channel.
READ: Business groups ask gov’t to help minimize Middle East crisis impact
Energy Secretary Sharon Garin earlier said the government is following a “whole-of-government approach” to maintain an orderly fuel supply.
The Philippines maintains an adequate oil buffer equivalent to approximately 50 to 60 days of national demand.— Roumina Pablo
