World News
Impact of Bunker Prices on Carriers' Profits "Cannot be Underestimated"
While Maersk Line succeeded in improving its bottom line in the third quarter through "vessel network efficiencies," much of the carrier's savings was attributable to a drop in bunker prices, supply chain news site the Loadstar reports, noting that fuel prices represent an important budget factor that carriers cannot control or even predict accurately.
Maersk Line reported it reduced its bunker consumption in Q3 by 7.8 percent year-over-year, while the average bunker price it paid fell 10.5 percent.
"The importance of fuel costs to the bottom line of ocean carriers cannot be underestimated," the Loadstar writes.
"Maersk Line's profit would have been more than halved if not for these savings."
The fact that average bunker prices held steady at around $600 per tonne for most of the year, after approaching $700 at times in 2012, has been a boon to carriers facing declining freight rates.
Looking into the coming year, Rotterdam IFO 380 is now selling at around $570 per metric tonne, and is said to have "little direction," but oil prices could change suddenly in response to political events or other factors.
While ocean carriers will have to assume oil prices will remain stable in 2014, the Loadstar says they must brace for potential increases by addressing freight rate erosion.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 504.50 | 2.50 | 620.00 | 3.00 |
| Rotterdam | 456.00 | 1.50 | 621.50 | 2.00 |
| Houston | 476.00 | 7.00 | 624.00 | 1.00 |
| Fujairah | 496.50 | 2.00 | 713.00 | 2.50 |
| Global 20 Ports Average | 526.50 | 0.50 | 712.00 | 0.50 |
| Global 4 Ports Average | 483.00 | 2.00 | 644.50 | 0.50 |
| Global Average Bunker Price | 570.50 | 1.50 | 751.00 | 1.00 |
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