Asia/Pacific News
Low Bunker Prices "a Negative" for Dry Bulk
Low bunker prices are helping companies cut operating costs, but some experts believe they are encouraging shippers to abandon slow steaming practices - a development that could add to the woes of the already troubled dry bulk sector, Reuters reports.
Earlier this year Ship & Bunker reported that rising charter rates and falling bunker prices was making slow-steaming among tankers less favourable, and supertankers in particular are now reported to be accelerating from 10 to 13 knots on empty return voyages between Asia and the Middle East.
Using the example of a run between Singapore and Fujairah in the United Arab Emirates, shippers note that three days could be shaved off the sailing time by increasing vessel speed, and based on current fuel costs this amounts to a spending increase of about $15,000 for a large crude carrier.
If the practice were to be adopted by dry bulk, some fear it would put further pressure on a sector already struggling to recover.
"Low bunker fuel prices are a negative factor as they lower the freight rate level at which ships will speed up and thus increase shipping supply," said Mats Berglund, chief executive at dry bulk Pacific Basin Shipping.
However Tim Huxley, managing director of Hong Kong-based Wah Kwong Maritime Transport Holdings, said that he is yet to see any pressure for dry bulk to follow tankers in speeding up.
"We have seen some requests (from charterers) to go faster on the tankers on ballast legs, but not on bulkers," he said.
While dry bulk rates remain far from their 2008 peak, tanker freight rates on July 20 hit a five-year high of $95,000 per day for a VLCC voyage from the Middle East to Japan.
In February, supply chain industry magazine Area Development reported that bunker prices are reaching a "tipping point" for shipping industry decision makers considering whether or not to continue with slow steaming.
