World News
Container Lines Face Dilemma Over How Much to Charge for Bunkers in Ukraine Crisis: Analyst
Container lines are struggling with the problem of how much to charge their customers for surging bunker costs in the wake of Russia's invasion of Ukraine, according to a leading industry analyst.
Global average VLSFO prices gained $24.50/mt to $987/mt on Tuesday, according to Ship & Bunker's G20 Index of prices at 20 leading ports, up from $536/mt a year ago. While the container lines have a right to pass this cost on to shippers through BAFs, they may not want to, Lars Jensen, CEO of consultancy Vespucci Maritime, said in a LinkedIn post on Tuesday.
"The curious element here is that the extremely high freight rates are already more than sufficient to cover the costs," Jensen said.
"The carriers therefore have a choice; increase the surcharges as per normal and fuel the already hotly burning shipper sentiments of price-gouging and hidden collusion in a step to safeguard the already anticipated spectacular financial performance for 2022.
"Logically speaking the BAF is not the problem - the base rate, premiums, detention & demurrage and access to capacity are the real problems for the shippers.
"Or remove (or freeze) the BAF in an effort to begin to mend fences with shippers in anticipation of a future normality where customer relations begin to matter again once the ships are not completely full.
"And to alleviate some of the strong political pressure being levied on the carriers for exploiting the current situation."
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 567.50 | 3.50 | 700.00 | 14.50 |
| Rotterdam | 512.50 | 4.00 | 695.00 | 17.50 |
| Houston | 556.00 | 6.00 | 679.00 | 1.00 |
| Fujairah | 562.50 | 2.50 | 755.00 | 0.00 |
| Global 20 Ports Average | 589.00 | 3.00 | 764.50 | 3.50 |
| Global 4 Ports Average | 552.00 | 3.00 | 699.00 | 2.50 |
| Global Average Bunker Price | 635.50 | 1.00 | 811.50 | 11.00 |
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