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Wednesday, September 19, 2018

BUNKER PRICE ADJUSTMENT CLAUSE

Concern has been expressed by members regarding the discrepancy between the Worldscale average bunker price used in the calculation of the schedule of flat rates and the actual prevailing market price for bunkers.

Members are referred to the articles in the November and December 1999 issues of the General Circular which report on INTERTANKO’s ongoing discussions with the Worldscale Associations, and the suggestions INTERANKO has made. It is uncertain what the Worldscale Associations will do, and in any case, no change will be made regarding the 2000 Worldscale Schedule.  Members would be well advised to consider using bunkers price adjustment clauses in the Charter parties, or hedging in the forward markets, if they wish to reduce their exposure to the fluctuations of the bunkers market.

INTERTANKO’s Documentary Committee at its meeting in London on 9 December 1999 considered this issue and prepared a bunker price adjustment clause. An improvement of the Worldscale system’s way of reflecting bunkers prices would be a preferred solution, as we recognise the difficulties individual owners have in introducing new charterparty provisions, however fair and reasonable they may be. The clause reads as follows:

“The voyage freights agreed in this charter have been fixed by reference to the New Worldwide Tanker Nominal Freight Scale as revised effective 1 January 2000 (“Worldscale”). The nominal rates upon which such voyage freight rates have been based shall be varied by the addition or subtraction of the product of the following formula to or from the rates quoted in Worldscale:

(0.158L + 100 + 5N) (C-B)       USD/ tonne

_________________________

74,450 - (0.079L+2.5N)

 

Where:

“L” is the length in nautical miles of the round voyage as set out in

Worldscale;

“N” is the aggregate number of ports of loading and discharge on the

chartered voyage; “C” is the current average worldwide bunker price for fuel oil (380 cst) on the date the vessel commences loading as quoted by Cockett Marine Oil Ltd;

“B” is 86.50 (being the price of fuel oil (380 cst) in USD/MT as set out in

Worldscale).” 

For further information: <mailto:john.fawcett-ellis@intertanko.com> or mailto:kristian.fuglesang@intertanko.com