As carriers continue to blank sailings to fight against the decline of ocean freight rates, they are also now facing a huge spike in bunker fuel costs.
Last week, the price of low-sulphur fuel jumped by $8 per ton, which means it has risen by 22% in the past ten weeks.
As the global shipping market continues to be driven by low demand and rates hovering around rock bottom, it may be unlikely that carriers can recover rising fuel costs through the traditional bunker adjustment surcharges.
Supply cuts, which have been driven by the OPEC, have led experts to predict a global deficit of 2m barrels a day for the final quarter of this year. This will very likely mean further bunker increases that go straight to carriers’ bottom lines.
In addition, shipping lines will be required to meet the EU’s Emissions Trading System (ETS) regulations from January 1st, whereby they pay a contribution for every ton of CO2 emitted by their vessels.
The above seemingly points towards a difficult short term future for carriers who have have been hit hard by over capacity and low demand.
On the flip side, they did ‘make hay’ during the post pandemic period with quarter after quarter of record profits being reported. So, no doubt the pendulum will be swinging back the other way some time soon.
If you have any questions regarding the above, then Westbound are here to help. So, please do not hesitate to contact us.
