Marine Fuel Surcharge Expires May 30, 2020
The cost of providing service is dependent on many factors that change over time and depend on market economies. Seaboard Marine consistently evaluates adjustments to vessel size, quantity, and average utilization of each vessel and our fleet, as well as the duration of our vessel voyages to provide the highest level of service to our customers. The price of fuel to operate our vessel fleet remains one of the most critical cost components under constant evaluation. Last year required significant fuel cost adjustments as the IMO 2020 regulation became law. At that time, it was the most significant impact on the cost of our vessel operations in the history of our industry. However, no fuel adjustment strategies could have prepared for the incredible disruption to trade and operational fuel prices caused by the onset of the novel Coronavirus.
Effective June 1, 2020, to ensure we continue to provide a consistent and viable connection for the markets we serve, Seaboard Marine will implement new tariff rules for marine fuel that factor for the extreme volatility in the fuel market and severe market conditions created by the COVID-19 crisis. Further, effective May 30, 2020, Seaboard Marine will be eliminating the Marine Fuel Surcharge Index to calculate the application of the Marine Fuel Surcharge. Our general tariff and service contract rates will be restructured and updated to reflect this change in fuel surcharges, however, this update will not affect the total freight rate. Going forward, tariff rules regarding fuel will address individual trade lanes and fluctuations in the size and number of vessels deployed in a trade, the overall vessel utilization, and the average price of fuel over a review period.
As always, we thank you for your continued support.