The past quarter has seen a spike in oil prices following the Middle East protests, with the Brent Crude index surpassing $100 a barrel in late January and hovering above $110–that is about 20% higher than it was on January 1st and more than 40% higher than six months ago. Bunker prices have reached around $630 per tonne.
The European Association of Vehicle Logistics (ECG) estimates that the extra costs to the European car haulier sector are about €20m ($28m) per month, and about €31m for the shipping sector. ECG president, Costantino Baldissara, called for help beyond the normal fuel surcharge clauses, warning the costs would drive some providers “to the wall”.
But manufacturers appear unfazed, citing the fuelsurcharge clause as a standard in contracts. These measures vary by manufacturer or national regulations and are often confidential, however they typically involve quarterly adjustments based on price variation from a base fuel rate. While some fragile providers could face a cash-flow dilemma between adjustments, in theory most increases are covered by manufacturers.
But it is difficult to know how fair they are–Bjorn Svenningsen, from short-sea shipping operator UECC, said that the clauses vary greatly. In other cases, such as land transport in Central and Eastern Europe, clauses might not account for price differences between bordering countries.
But these adjustments could fall to the favour of either party, and the industry could benefit from a wider standard on surcharges. Jorgen Olesen, vice president of logistics for Mazda Motor Europe, even suggests that, based on his 25 years experience in shipping, surcharges earn providers money when the price of oil goes up–so carmakers should get a rebate in rates. Unsurprisingly, few providers have agreed with him.