BIMCO: Shippers No Longer Under Pressure to Save Money on Bunkers

The savings generated from cheaper bunkers has now outstripped savings from slow steaming.

Plummeting bunker prices, which in some ports have hit ten year lows, means that shippers are now loosening the reins on bunker saving practices such as slow steaming, Shipping Watch reports. 

A massive slide in crude prices has wound back the average bunker bill to 2008 levels, and the resulting savings are not expected to diminish any time soon, according to BIMCO chief analyst Peter Sand. 

That means that ships are now willing to travel at faster speeds, especially as bunker savings have now outstripped the savings generated by slow-steaming. 

"We saw already in 2014, and we're seeing it again this year especially among VLCCs, that customers are willing to pay the extra costs to have goods delivered faster," said Sand. 

With the current environment of cheaper fuel, the industry is expected to be saving about  $158 million per day, said BIMCO, which is substantially higher than the $117 million of fuel savings per day estimated in November 2014. 

But BIMCO warns that it remains to be seen who benefits from the price drop.

"These savings will not necessarily benefit the company, as this entirely depends on the contract and whether it is an owned or chartered vessel. What's new is that operating costs have long been the minor factor in terms of overall costs, and this is no longer the case," says Sand.

"Although companies are still focused on lowering fuel consumption, the pressure to save money on fuel has decreased, which has resulted in less pressure on the industry overall."

Bunker prices have stayed low as crude oil prices continue to weaken on oversupply concerns. 

Despite the the beginnings  of a crude recovery early this year, oil prices renewed their slide in July after the end of sanctions on Iran threatened to introduce new supply into an already saturated market.