Container carriers see reversal of bunker costs and terminal fees

10/23/2017

Falling bunker costs and rising terminal handling charges have reversed the relative significance of fuel and port costs to container carriers, according to a report from analyst SeaIntel.

By analysing the published cost structures of three major container lines – Maersk Line, CMA CGM and Hapag-Lloyd — SeaIntel found that port, terminal and canal charges had risen dramatically as a percentage of operational costs, while fuel costs had fallen.

Extrapolating out across the whole industry, SeaIntel found that while bunker costs had fallen from nearly 25% of opcosts to just over 10%, port costs had risen from around 25% to over 40% of opcosts.

“In essence, this means that following a period in 2007-2012 where fuel costs were approximately as important as the combined costs for ports, terminals and canals, this then changed drastically in 2013-2016,” SeaIntel said. “In 2016 we reached a point where expenses for ports, canals and terminals are 3.6 times as important as fuel costs.”

The increase in the relative cost of terminal fees and canal tolls was already having an impact as carriers had rerouted some US east coast backhaul voyages south of Africa in an effort to avoid canal tolls.

“For the ports and terminals, it is important to note that the continued high level of competitive cost pressure on the carriers will continue to force them to focus on the most important cost elements — in this case the port and terminal costs,” SeaIntel said.

“In this context, the cost saving action with the largest impact a carrier can make is to increase the number of direct sailings as opposed to feeder connections through a hub, simply because this will reduce both feeder and terminal costs to zero in connection with the transhipment of the individual box.”

Carrier networks were still far from optimised for this sort of port pairing, SeaIntel added, but this was due more to alliance members using terminals in which they held ownership stakes.

“As the competitive pressure is maintained in coming years, network rationalisations will follow,” SeaIntel said.

“The point where carriers can make the largest impact on their operational costs is in the ports and terminals.”