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Seaborne customers will face sharp increases in fuel prices in December

2019-12-17 10:28

With less than six weeks to go before the implementation date of the IMO 2020 low-sulfur law, "shippers and forwarders are starting to pull out their wallets to help shipping companies pay for the extra cost of clean, low-sulfur fuel," said Philip Damas, director of Drewry Supply Chain Advisors.

He stressed that Drewry will announce its first fuel price adjustment factor reference price on December 4, which is based on low-sulphur fuels and in line with the price independent BAF index mechanism. Using this mechanism, the report notes, the fuel reference price will change from the original high-sulfur IFO 380 fuel to the new low-sulfur fuel, affecting the new BAFs from January.

At these Numbers might be like study, he points out that since the beginning of October, drew in tracking the main fuel supply port of the weighted average of the low sulfur fuel price is $542 per metric ton, adding: "so, assuming that the next two weeks prices remain at this level, road during October and November in the reference price of fuel will be around 530-550 dollars, and is suitable for the fourth quarter of 19 issue of the same fuel supply port of the IFO 380 compared to the price of $396, up 34-38%.

Delury recommended that shippers and forwarders use the october-november average low sulfur rates to set the new BAF rates, which will take effect from January 1, 2020, and noted that several shipping companies have announced transitional or "emergency" bunker charges from December 1, 2019.

They said the rules apply only to spot prices and contracts of less than three months, but one Drury customer with an annual contract was also asked by some of his shipping companies to start paying the imo BAF from December 1, "Damas stressed.

The Drewry Benchmarking Club is being used by many UK high street Banks to secretly benchmark UK financial services companies on trade routes. It will be interesting to see if the BAF specified by DRWRY BAF is in line with bunker prices, and whether some operators will lower their base rate and charge "full BAF" in the next contract.


*Data from network

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