14 August 2018
St Helena Government is aware that St Helena residents and importers are concerned about the price adjustments to freight costs on each call of the MV Helena.
These price adjustments are driven by three factors, each of which has an effect on the overall cost of freight on each voyage. The key drivers are:
- Bulk Fuel Costs (BAF)
- Currency Adjustment (exchange rates) (CAF)
- Consumer Price Index (CPI)
The Bunker Adjustment Factor, or BAF, refers to a floating part of the sea freight charges which represents additions due to oil prices. In this case, the rates are adjusted per the changes to bunker fuel prices in Cape Town.
The Currency Adjustment Factor, or CAF, refers to a similar floating part of the sea freight charge which represents changes to the applicable currency rates.
It should be noted that the BAF and CAF can reduce as well as increase the overall cost of freight, as they are based solely on the fluctuations of international bunker fuel and currency markets. CPI increases to base freight rates are calculated from the UK CPI rate issued by the Office of National Statistics.
Bulk Fuel Costs and Currency Adjustments are managed voyage by voyage and the CPI is applied annually. Since the MV Helena’s first voyage in February 2018, Bulk Fuel costs have increased by 19.3% and Currency rates by 9%.
All shipping liner services have similar costing mechanisms in place which are driven by these factors.
The public should also note that whereas previously the RMS freight service was subsidised, the MV Helena service is a purely commercial enterprise and receives no subsidy.
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SHG
14 August 2018