Maersk officials say the new formula will make it easier for shippers to understand the surcharge.

Maersk Line last week introduced a new formula for its bunker adjustment factor that it said is designed to provide more simplicity and transparency in the way the fuel surcharge is applied.

The Danish carrier said it built the new formula along the principles that are common in transportation industries such as airlines and parcel services, where prices and rates reflect fluctuations in fuel prices.

The formula builds on elements such as fuel consumption, transit time and imbalances in container flows. The formula will become part of all the annual contracts Maersk signs with shippers in the trans-Pacific for the upcoming shipping season.

The formula includes a factor for bunker fuel that will be recalculated every three months based on the most recent 13-week average of fuel prices. It also includes a constant that will be recalculated every year at the start of the contract season based on figures provided by independent third-party sources for each of the routes Maersk Line serves.

The factor for the constant consists of four elements: fuel consumption for ships of different sizes that is provided by Clarkson’s, the London-based ship broker; the capacity of different-sized ships provided by AXS-Alphaliner; transit times for the various routes; and an imbalance factor that is based on utilization figures provided by Drewry Shipping Consultants.

Maersk Line said that only changes in the oil price will entail changes in the BAF level, so that its customers will only pay the variation in cost. It said that although the BAF rises when fuel prices increase, it will also fall when the bunker price declines.

Maersk plans to implement the new BAF formula separately in its various trade lanes, beginning this quarter. It expects to complete the rollout by Jan. 1, 2009.

Each of the carrier’s trades will make announcements on www.maerskline.com/baf when they transition to the new BAF formula.

Maersk Line said the cost of bunker fuel has tripled in the last three years and now accounts for nearly half of total vessel costs, which are 20 percent higher than 10 years ago. “Today, we only recover approximately 55 percent of the bunker expenses via BAF surcharges. Naturally, this poses a significant exposure to Maersk Line, and traditionally we have tried to recover this via rate increases,” said Vincent Clerc, vice president for Pacific services.

He said the new BAF formula will create more transparency. “Our customers will experience a simple and fair way of applying BAF,” Clerc said.

Carriers say their inability to recover the rising cost of bunker fuel has been particularly acute in the trans-Pacific, where they have had to cut capacity and shift vessels to other routes, such as the Asia-Europe route, where they have been able to recover more of their fuel costs.

Clerc said Maersk Line is currently able to recover only 10 to 15 percent of the cost of increases in the bunker fuel used in the trans-Pacific, while the average fuel-cost recovery in all of its global services is 55 percent. The average rate of its fuel-cost recovery would be higher if it were not dragged down by the low rate of recovery in the trans-Pacific trades, Clerc said.

“The old formula is broken and only applies to a small part of the book of business,” he said. “Our customers have an increased understanding and acceptance of BAF as a floating mechanism, and they increasingly accept that we must share the extraordinary costs in a just way. They see it on their trucking bills, their rail bills, so they understand the mechanism and the principle.”

Clerc said the new formula is designed to be fair, transparent and easy for Maersk’s customers to verify and anticipate under different scenarios. “What is important is that, over the long run, having prices that are too low on the trans-Pacific for carriers to be profitable is not sustainable,” Clerc said. “I think every carrier is having the same issue, so the time of playing games by trying to disguise GRIs (general rate increases) as bunker adjustment factors is gone.”

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