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News

INCREASE IN FUEL SURCHARGE DUE TO WORLD FUEL COST INCREASES

20/8/2008

After absorbing all the rising costs of fuel for several months, the Isle of Man Steam Packet regrets that it must now pass on a proportion of the additional costs to customers with effect from September 1st.

The freight fuel surcharge will increase by £6.00 per metre, to £8.00 per metre – or £40.00 per trade/unaccompanied car and low van. The passenger surcharge will increase by £2.50 to £5 per single journey.

These fuel surcharges are regulated by the Department of Transport by reference to the weighted average cost of marine fuel oil incurred over the previous six months and are determined by an agreed formula contained in the Fuel Surcharge Agreement between the Department and the Company. The September 1st increase will be reviewed in February 2009.

Chief Executive Mark Woodward explained: “World fuel prices have reached record levels in recent months, and in the marine transport sector the scale of the increase this year has been quite exceptional.

“Over the last decade, marine fuel costs rose from around $100 per metric tonne to around $600/mt by last year. This year has seen that price rise dramatically and it can now exceed $1,200/mt.”

Mr Woodward added: “The Steam Packet Company has absorbed much of the increased cost over the last few years, and since March this year has already absorbed several million pounds in extra costs, which it essentially cannot recover.

“We have made reference several times this year to the fact that surcharge increases would be inevitable, but we have not increased fares this summer even though fuel now costs as much as £15,000 per return trip to Liverpool. Other UK shipping companies increased their fares in the spring - we did not, even though marine fuel costs have almost doubled. Airlines have increased their fares and, regrettably, some have ceased trading.”

Captain Michael Brew, Director of Harbours for the Department of Transport, said a fuel surcharge agreement was signed by the Isle of Man Steam Packet Company and the Department in August 2005.

He said: “This agreement sets surcharges on passengers and freight and tries to be fair and reasonable in their application.   The level of surcharge is linked to the variable costs of fuel actually incurred.  The agreement will ensure that any sustained reduction in fuel costs will lead to reduced surcharges at the next review.

“The Company is not charging its full entitlement under the agreement as the Company is not charging a number of categories of passenger and freight traffic, effectively absorbing the extra costs incurred.

 “Based on the information regarding increased fuel costs supplied by the Isle of Man Steam Packet, information gathered from other sources and the formula contained in the Fuel Surcharge Agreement, the Department concurs with the surcharges for freight and passengers outlined by the Company.”