An increase of around 25% in the Steam Packet Company’s freight fuel surcharge will take effect from April 1, Chief Minister Alf Cannan has confirmed.
The rise, which applies for three months, has been calculated under the terms of the sea services agreement and verified by the Department of Infrastructure.
Answering an urgent question in Keys this morning, Mr Cannan said the surcharge mechanism allows the company to recover exceptional and volatile fuel costs that fall outside the base assumptions used when setting fares.
“The surcharge is not designed to generate profit,” he said.
Quarterly
Fuel surcharges are calculated quarterly using a defined formula based on both historic prices and forward-looking cost estimates over a rolling period.
Mr Cannan told members that any proposed surcharge must be supported by detailed calculations and submitted to the department for independent verification before it can be applied.
“The department must be satisfied that both the calculations and the allocations of the surcharge between passenger vehicle and freight customers are reasonable,” he said.
He added that government does not have the power within the agreement to direct the company not to apply a surcharge calculated in accordance with the agreed mechanism, though it can intervene if deemed to be of national importance.
Hauliers
Jason Moorhouse, who tabled the question, asked whether hauliers would face the 25.8% increase that had been cited in a letter to customers.
Mr Cannan confirmed the increase was around 25%, describing it as “steep” and “unwelcome for many”.
He sought to put the figure in context, noting that the freight fuel surcharge remains around a third lower than the peak of £16.41 per lane metre seen in late 2022.
Dr Michelle Haywood raised concerns about the resilience of businesses following years of cost-of-living pressures.
Mr Cannan said government continued to monitor the situation through the economic strategy and national strategy board, and pointed to recent increases in personal allowances as evidence of action taken to alleviate pressures.
Surcharge
Lawrie Hooper asked whether the government would consider varying the surcharge arrangements, as was done during the Covid-19 pandemic.
Mr Cannan said all options were on the table, but called for patience given the uncertainty created by conflict in the Middle East.
“We just simply don’t know,” he said.
He confirmed that a formal industry liaison group, including the treasury minister and the minister for enterprise, would meet this week to provide real-time monitoring of economic impacts.