The Chamber of Commerce has raised concerns over fuel-related freight cost adjustments being implemented by DFDS – arguing that there are “legitimate questions” around how the increases are being calculated.

The organisation said that many of its members were worried about the methodology being used to work out ‘Bunker Adjustment Factor’ rises, which refers to additional freight charges imposed to reflect marine fuel price fluctuations.

It comes not long after the Danish ferry firm’s Jersey route director Chris Parker revealed that the operator was speaking to its freight customers about how increased costs might need to be passed on in the wake of the ongoing conflict in the Middle East.

Freight costs do not stop at the port. Any increase feeds directly through to retail pricing, construction costs, hospitality supply chains and the overall cost of living in Jersey

Chamber of Commerce chief executive murray Norton

The conflict has choked the passage of oil through the Strait of Hormuz, with the International Energy Agency warning earlier this year that “the loss of supply is having significant impacts in global markets”.

Chamber chief executive Murray Norton told Express that the organisation “remains concerned at the continued upward pressure on freight costs” and “the wider impact this ultimately has on islanders through higher prices across the supply chain”.

“Legitimate questions” around cost increase calculations

Mr Norton continued: “While we recognise the need for commercially sustainable ferry operations and understand the rationale behind fixed passenger pricing and fuel hedging arrangements, there remain legitimate questions around how Bunker Adjustment Factor increases are being calculated and allocated.

“Of particular concern to many Chamber members is that the current BAF methodology is calculated across the total fuel consumption of four vessels operating within the Jersey network, despite the fact that only two vessels are predominantly freight vessels and approximately 97% of all freight is carried on those two vessels.”

He explained that Chamber members were therefore questioning whether freight customers were, “in practice”, absorbing fuel-related operating costs associated with vessels primarily supporting the passenger market.

Pictured: DFDS freight and passenger ferry Stena Vinga.

Mr Norton contended that “at a time when businesses and consumers are already under significant inflationary pressure, there is a strong expectation from industry that every effort is made to ensure freight is not carrying a disproportionate share of wider network operating costs”.

“This matters because freight costs do not stop at the port. Any increase feeds directly through to retail pricing, construction costs, hospitality supply chains and the overall cost of living in Jersey,” he added.

“Businesses remain deeply concerned that continued upward pressure on freight will further compound inflationary pressures across the island economy.”

“Hopeful that greater clarity can now be achieved”

However, Mr Norton also said that Chamber welcomed “the continued engagement with government and DFDS” and would continue representing the concerns of members “whilst seeking greater transparency around the methodology and practical impact of BAF calculations on Jersey’s economy and consumers”.

“With further briefings planned for Chamber members, we are hopeful that greater clarity can now be achieved.”

In line with standard international maritime practice, DFDS operates a Bunker Adjustment Factor (BAF) mechanism to provide transparency around exceptional fuel cost increases

DFDS statement

Asked for comment by Express, DFDS stated that it “recognised the concerns raised by the Chamber of Commerce regarding freight costs” and “welcomed further discussions with both industry and the Government of Jersey”.

The company cited recent increases in fuel prices driven by “ongoing geopolitical tensions in the Middle East”, resulting in “significant volatility in international energy markets”.

“In line with standard international maritime practice, DFDS operates a Bunker Adjustment Factor (BAF) mechanism to provide transparency around exceptional fuel cost increases,” the statement continued.

“The surcharge is reviewed monthly against the average cost of marine gas oil in Rotterdam.”

DFDS said that BAF is not applied to passenger fares, partly because passenger tickets are often purchased months in advance, and pricing is governed through the ferry concession agreement.

The company also noted that the June BAF surcharge would be around 10% lower than the May figure following a slight reduction in fuel prices during the latest monthly review period.

DFDS added that it remained “committed to ongoing engagement with government, Chamber of Commerce and the wider freight supply chain” regarding pricing, operations and connectivity for the island.

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