Hong Kong, West Port. File Image / Pixabay
Hong Kong-based box ship operator OOCL is to change the way it prices in its fuel costs in advance of the coming stricter sulfur cap on bunker fuel.
OOCL, a top ten player globally in term of container cargo, has said the expected higher fuel bill post-IMO2020 is behind the move.
"By looking into the expected bunker consumption of our fleet and the projected price difference from switching to the compliant fuel which may possibly become increasingly expensive due to tight supply in the market, we expect the additional cost impact to easily fall well above half a billion dollars," the company said in a statement.
To mitigate the impact of the heftier bill, the company is to introduce a pricing mechanism "based on a floating bunker formula that will better reflect the changes in the industry environment".
"This approach will take various factors into account, including the different fuel types being used, fuel price fluctuations, ship size and capacity, and vessel utilization levels," the statement continued.
The move is in line with other big industry players who have adjusted fuel pricing upwards to meet the predicted higher fuel prices. The reaction of logistics shipping firms, who will have to shoulder some of the extra burden, has, not surprisingly, been negative.