High Freight Rates Cushion Carriers' Inflated Fuel Bill

Container lines: inflated fuel costs. File Image / Pixabay.

With bunker prices seemingly stuck on an upward trajectory, the 'cheaper option' of scrubber plus heavy fuel oil is a tempting one.

Even with the faff associated with switching fuels to meet environmental regulations, the savings are substantial.

"It's obviously easier from a planning perspective to operate a ship that is just burning low-sulphur fuel, given the constant switching of tanks for ECA and SECA regions, but the savings just cannot be ignored," a bunker-buying shipping executive told container line news provider the Loadstar.

In the same conversation, the executive claimed that round-trip fuel savings on an ultra large container vessel that bunkered with heavy fuel oil was currently "in excess of $500,000", when compared to low sulfur fuel oil.

The comments were made against a background of rising bunker fuel costs visible in the latest round of quarterly reports from the sector.

According to Loadstar, Japanese carrier ONE reported a 69% increase in the average price paid for fuel in the last three months of 2021, to $531 per metric tonne, compared with the same period of the previous year, despite an 8% decline in its liftings.

Citing a carrier industry source, the report that if it wasn't for "the impact of sky-rocketing freight rates... there would be sheer panic [in the industry] about the spike in fuel costs".

The latest prices analysis from Ship & Bunker confirms the widening gap in bunker fuel grades.

The so-called scrubber spread has been at its highest level in two years, according to Ship & Bunker.

The spread -- the premium for VLSFO bunkers vs HSFO -- stands at $168/mt which is the highest it has been since February 25, 2020.

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