News

Implementation of the Inland Fuel Adjustment Factor (FAF)

Dear valued customer,

At Hamburg Süd, your partnership remains of the utmost importance to us and our aim is to give you overview and transparency in your logistical network, so you can properly plan your end-to-end supply chain moves. As your logistics partner, we work to ensure that your cargo moves with agility, connectivity and ease, meeting the overall goal of ensuring the highest efficiency in your logistics operations.

Recent global developments have impacted the logistic industry in multiple ways. For Inland Transportation services, the global increased inflation, major fluctuations of currencies and the disruption of crude oil supply chain have directly contributed to the rise of fuel price volatility.

To give you more visibility and understanding of fluctuations of fuel costs, we have reviewed the rate structure of Inland Rates, for Ocean transportation contracts. Therefore, from 14 October 2022, Inland Rates will be presented as a combination of an Inland Haulage charge(1) and Inland Fuel charge(2):

Changing From To
Inland Haulage Export (IHE) $ 650 Inland Haulage Export (IHE) $ 500
Inland Fuel Adjustment Factor (FAF) 30%
Inland Fuel Export (IFE)* $150

$650

*Calculated based on FAF% applied over Inland Haulage Export (IHE)

While the Inland Haulage charge(1) remains fixed throughout the contract’s validity (special terms may apply for rates validity under multiyear agreements), the Inland Fuel charge(2) will be adjusted quarterly, based on reviews of Inland Fuel Indexes(3) variations. While we aim to have the new Fuel Adjustment Factor model in place globally, there are a few locations where the current inland rate structure will remain valid until further notice. In order to identify Inland corridors on which the new model applies, please refer to the quote feedback document. The FAF model applies on all corridors where fuel charges export or import (IFE/IFI respectively) are indicated in the document.

Please note that it is not an additional surcharge but a change of inland rate structure, providing a more descriptive explanation of our inland rates on your billing.

The above shall not apply to contracts that have commenced prior to the 14 October 2022, unless otherwise agreed between the parties.

All of the elements of fuel charge review (calculation method, charge review calendar and the compilation of fuel indexes adopted) will be published on Hamburgsud.com.

Should you need further clarification on the FAF model – or how it may impact you and your business with us – please reach out to your commercial partner or one of our customer service and commercial teams at Hamburg Süd, Maersk or Sealand.

We thank you for your trust and loyalty, and hope the introduction of the FAF helps you streamline and continue to expand your supply chain abilities. We look forward to continuing to assist you on all matters pertaining to your logistics needs.

Our teams are always by your side.

Best Regards,

Your Hamburg Süd Team

1. Inland Haulage charges variation: Inland Haulage Export (IHE), Inland Haulage Import (IHI) and Inland Landside Haulage (ILH)

2. Inland Fuel charges variation: Inland Fuel Export (IFE), Inland Fuel Import (IFI) and Inland Fuel (ILF)

3. Fuel indexes are defined on a Country basis and applied based on inland service execution location.

Customer FAQ for FAF

What is the FAF?

FAF stands for Inland Fuel Adjustment Factor. The Inland Fuel Adjustment Factor (FAF) is an index-based mechanism to calculate and incorporate the fuel cost variation into Inland prices and facilitate contractual rates review.

This is not an implementation of a new surcharge, but the review of the rate structure of Inland rates, transitioning out from the current “inland haulage with fuel inclusive” price model towards the split of inland rates into a combination of two price components: Inland Haulage charge and Inland Fuel charge. We believe doing this will give our customers more clarity and visibility on how they are being billed.

The Inland Haulage charge component is fixed throughout the contract’s validity (special terms may apply for rates validity under multiyear agreements), and the Inland Fuel charge component will be adjusted quarterly, based on reviews of Inland Fuel Indexes variations.

Why is the FAF being implemented?

The FAF is being implemented to simplify your Inland transportation billing experience. Recent global developments have impacted the logistic industry in many ways. On Inland Transportation services, the global increased inflation, major fluctuations of currencies and the disruption of crude oil supply chain have directly contributed to the rise of fuel price volatility.

To give you the most visibility and understanding of fluctuations to fuel costs, we have reviewed the rate structure of Inland Rates, as part of Carrier Haulage contracts, and have decided to implement the FAF. Please note that this is not an additional surcharge but a more descriptive explanation of the rate.

Is the FAF a surcharge? Is it an add on to the Inland Emergency Energy Surcharge?

No, the FAF is not a surcharge. It is not an add-on to the Inland Emergency Energy Surcharge.

The FAF is a more descriptive explanation of the rate, including two components now: Inland Haulage charge and Inland Fuel charge.

How is it being implemented?

As of 14 October 2022, Inland Rates will be presented as a combination of an ‘Inland Haulage’ charge (IHE/IHI/I) and ‘Inland Fuel’ charge (IFE/IFI/IFL) on your invoices.

While the Inland Haulage charge remains fixed throughout the contract’s validity, the ‘Inland Fuel’ charge will be adjusted quarterly, based on reviews of Inland Fuel Indexes variations.

When will Hamburg Süd be implementing the FAF?

The FAF will be implemented globally on 14 October 2022.

Which contracts will be affected?

The FAF will be implemented on all new ocean service contracts or those up for renewal (containing inland transportation). Active contracts (agreements that have commenced prior to 14 October 2022) will not be impacted by this change, unless otherwise agreed by the parties.

On which carriers will the FAF be applicable?

It will be applicable for all brands: Hamburg Süd, Maersk and Sealand.

What about the EEI/EEE (Emergency Energy Surcharge)?

EEE/EEI will not be applicable to contracts using the FAF Model. This is because fuel price fluctuations will be adjusted by FAF quarterly reviews. For contracts that are not using the FAF Model, the EEE and EEI are still applicable.

Is the FAF country specific?

Yes. Fuel prices can rise and fall in line with a combination of factors (see list below), with many being strongly influenced by country-level/local decisions:

  • Changes in international benchmark prices
  • The value of the EURO(€) relative to the US dollar
  • Distribution and marketing costs and profits
  • Pricing decisions by wholesalers and retailers
  • Taxes
  • Supply and demand
  • Refining costs and profits
  • The cost of crude oil