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Note to Customers (July 2011): Since 2009, 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, vessel charter rates, and equipment costs for added vessels in a sailing. After an extensive review and discussion of member lines’ slow steaming practices and cost considerations, TSA as a group has revised its bunker charge formula to reflect net fuel cost reductions resulting from slow steaming. While the basic calculation formula structure remains unchanged, certain underlying assumptions in the formula regarding fuel consumption patterns, effective capacity and price sensitivity per slot have been adjusted for average net savings from slow steaming. TSA as a group has adopted the revised formula as a voluntary guideline, with an effective date of August 1. However, TSA member carriers have made individual decisions – based on their respective market objectives and internal considerations, to adopt the revised formula in whole or in part, or to retain the previous TSA formula for the present time. Same Structure, Different Voyage Characteristics The bunker charge will continue to be adjusted quarterly, on January 1, April 1, July 1 and October 1, based on a 13-week reporting period that ends approximately 30 days before the effective date of the next adjustment (see below). What is different about the revised formula is the set of underlying assumptions about a typical eastbound transpacific sailing. Slow steaming affects a typical sailing in several ways, however, that in turn alter certain underlying elements in the bunker charge calculation shown above. These include:
Certain offsetting costs of operating an additional ship (equipment, crew, fuel, cargo handling) to move the same cargo volume mitigate the actual fuel cost savings of a slow-steaming strategy. This must also be factored into the equation. TSA’s analysis of the net effects of slow steaming has led to the following changes:
*Reduction in sailing days reflects a) changes in membership and therefore average sailing characteristics from when the formula was last modified; and b) recalculation of proportionate eastbound sailing time, taking into account greater use of slow steaming westbound. The adjustments above in turn affect price sensitivity, and with it the bunker charge tiers triggered with each $20 increase in the average fuel price. Current price sensitivity is $20 to the West Coast and $38 to the East Coast/Gulf for each $20 increase in the fuel price; the new sensitivity is $14 to the West Coast and $30 to the East Coast/Gulf. These result in the revised dry cargo conversion table shown at right. Calculation TSA bunker charges are based on a calculation of average weekly West Coast and East Coast/Gulf bunker prices over a 13-week period ending 30 days prior to the effective date, as follows:
The simplest way to calculate the charge is to:
Please Note: Because the average weekly West Coast and East Coast/Gulf prices are often different, it is necessary to look them up separately under the West Coast and East Coast columns in the table as shown in the earlier example. Reading straight across from one column to the other will not, in most cases, provide the correct charge levels. Customers whose contracts include bunker charges calculated under the previous Bunkerworld formula can use the calculation instructions and tables in the Bunker Fact Sheet posted elsewhere in this section of the web site. The Fact Sheet also contains added background and detail on the basic underlying charge and its calculation methodology. For customers with bunker charges calculated under TSA’s pre-2008 bunker formula, that information will no longer be posted on the TSA web site and customers are requested to contact their carrier(s) going forward.
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