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Maersk Line to levy $60 surcharge on rising fuel costs
Maersk Line, which ferries the largest proportion of the country's container traffic, today said it will be levying a surcharge of around USD 60 per standard 20-foot container to cover for rising fuel costs.
PTI



Maersk Line, which ferries the largest proportion of the country's container traffic, today said it will be levying a surcharge of around USD 60 per standard 20-foot container to cover for rising fuel costs.

"We have introduced an emergency fuel surcharge. For any shipping line, fuel is one of the key components of variable costs. We have seen an increase in bunker price of around 20 percent since the beginning of the year," the company's managing director for India, Sri Lanka and Bangaldesh, Steve Felder, told PTI today.

He said the surcharge varies as per geographic corridors in which it operates, but put the figure at an average of USD 60 per standard 20-foot container (TEU).

The levy sets in from tomorrow for all the customers, except the ones in the US, where it would be from July 1, he said.

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Felder said the company's current contracts with customers allow for such emergency surcharges and added that the trade also understands the difficulties faced by the shipping lines.

When asked if the firm fears losing market share - which stood at 19 percent as of end-2017 - because of such a charge, he said its peers have also introduced similar charges in order to recover the costs of the additional input costs from the customers.

Commenting on a specific question on margins, he said the additional surcharge will help recover the extra costs that are being incurred, hinting that the spreads will be maintained.

The container line came up with a trade report for container movements in and out of the country today, which said that imports went up by 16 percent and exports increased by 7 percent.

Felder said the imports were majorly due to a high import of waste paper and metals into the country after China imposed certain restrictions on it, while the exports growth was driven by the setback of demonetisation and GST implementation waning off.

He said at a combined level, the total trade was up 11 percent during the first three months of the year, adding the firm expects the same performance to continue.

India is for the first time planning to export more than one million tons of sugar to China, a potential $500 million export that was proposed by Prime Minister Narendra Modi to President Xi Jinping at their April 28 meeting in Wuhan.

Following up to their talks at the summit, a delegation of Indian sugar mills and exporters met with major Chinese State-owned companies and buyers in Beijing on Friday.

Sugar was one of three areas particularly flagged by Modi as a potential source of reducing the huge $50 billion trade deficit in China's favour. He also highlighted rice and pharmaceuticals.

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Gaurav Goel, President, Indian Sugar Mills Association, said that the potential target was between 1 and 1.5 million tons of raw sugar exports, valued at around $500 million.

The current season's production is around 32 million tons, and the surplus this year is likely to be around 7 million tons.

China is one of the world's biggest import markets for sugar, consuming around 14 million tons annually while producing only 10 million tons. Interestingly, China's sugar consumption is far below India's annual consumption of 25 million tons despite its bigger population.

"China is a market that India has never tapped, and it's the biggest importer of sugar in the world," Goel said.

Chinese state-owned sugar refiners and importers as well as representatives of the China Sugar Association attended Friday's meeting, organised by the Indian Embassy.

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Abinash Verma, Director General, ISMA, there were two reasons for Chinese interest: the lower freight costs and import time from India as opposed to Brazil, where China currently imports large amounts of sugar, and also India being included on China's exempted list of countries with a lower 50 per cent tariff, rather than 90 per cent.

If an agreement is reached in August, exports could begin as early as September this year. India currently exports small amounts of sugar-the figure is only around 200,000 tons-but the plan is to increase this number to 5 million tons next year, with China and Bangladesh seen as the major possible export markets.