World News
Carriers May Face "Difficult Task" Negotiating Contracts Ahead of ECAs
Carriers adopting a separate low-sulfur surcharge may face a "difficult task" in convincing big shippers to pay the amount as a separate charge in their contracts, according to Drewry.
The Transpacific Stabilization Agreement (TSA) announced early this year that its member carriers would introduce an extra sulfur surcharge in order to pass along added fuel costs to customers in light of upcoming Emission Control Area (ECA) regulations.
The regulations mean that beginning January 2015, sulfur content in marine fuel used in ECAs will not be permitted to exceed 0.10 percent by weight, down from the current ECA limit of 100 percent, forcing many companies to turn to more expensive alternatives such as marine gas oil.
Drewry said however, that the coveted large volume shippers often had specific "no surcharge" clauses in their original contracts, which may prove a hurdle for carriers when contracts for 2015-2016 are negotiated in May 2015.
"Whether shippers accept the separate surcharge within the next annual contracts is not a given," said Drewry.
Instead, the report recommended that large shippers try to include the new surcharges in their contracts with all-inclusive rates fixed for 12 months.
Using larger mega-vessels and fuel-efficient ships will help to recuperate costs, though not all of them, said Drewry.
The TSA began announcing this month some of the details of the surcharge, which would be calculated based on route and amount of fuel used.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 647.00 | 6.00 | 762.00 | 5.50 |
| Rotterdam | 599.00 | 1.00 | 751.00 | 0.50 |
| Houston | 618.00 | 11.50 | 802.50 | 6.50 |
| Fujairah | 642.00 | 5.50 | 883.50 | 5.50 |
| Global 20 Ports Average | 661.50 | 3.50 | 859.00 | 5.00 |
| Global 4 Ports Average | 629.50 | 1.00 | 799.50 | 1.50 |
| Global Average Bunker Price | 719.00 | 3.50 | 915.00 | 7.50 |
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