The Steam Packet will bring in a 25% increase in its freight fuel surcharge from April 1.

Chief Minister Alfred Cannan told the House of Keys that the increase would be ‘unwelcome for many’.

He said he appreciated it was a ‘steep increase’ but said the freight fuel surcharge was around a third less than its peak of 16.41 per lane metre seen in late 2022.

‘I know that's little comfort, but I just want to put it into context. We're not seeing the same level of increases that we saw in that critical point in that 2022-23 period,’ Mr Cannan told MHKs.

Customers were informed of 25.8% increase, working out at an extra £2.27 per lane metre, in a letter from the Steam Packet.

Mr Cannan told MHKs that the purpose of the fuel surcharge is to allow the state-owned ferry operator to recover ‘exceptional and volatile’ fuel costs that fall outside the assumptions used when setting fares.

‘The surcharge is not designed to generate profit,’ he insisted.

Mr Cannan explained that fuel surcharges are calculated quarterly using a formula contained in the Sea Services Agreement and independently verified by the Department of Infrastructure.

He said that the Steam Packet operates on an arm's length commercial basis, and there is no power within the Sea Services Agreement to direct the company not to apply a surcharge calculated in accordance with the agreed mechanism.

But he said government may intervene should it be deemed to be of national importance.

‘Government continues to engage closely with the company on fuel cost, forecasting, the transparency of calculations and the timing of any charges, ‘ the Chief Minister told MHKs.

Rushen MHK and former Infrastructure Minister Michelle Haywood suggested that after years of cost of living crises, the resilience of Manx businesses was ‘now at an all time low to withstand further shocks’.