World News
Gold Star Exec Expects Further Intra-Asia Box Rate Increases on Bunker Price Growth
Danny Hoffmann, Managing Director of intra-Asia box carrier Gold Star Line Ltd (Gold Star) says increasing bunker prices will likewise push up freight rates, JOC reports.
Hoffman, who notes that bunker costs account for 11 percent of the company's operating expenses, says there is no space for further increases as difficult market conditions have made some routes unprofitable for container carriers.
"The moment the bunkers rise further, we will see rates increasing as well, otherwise a carrier cannot operate," Hoffmann told JOC.
"The bunker prices are a big issue for such a low-rate trade. This can be a generator that will drive the rates up because carriers cannot cover the higher prices."
Gold Star, which moves about 5,000 TEU per week, holds fifth place in terms of market share on the China-India route, yet has still be unable to escape rate deterioration stemming from excess capacity.
"We do see some rate increases and that will continue, but only on the strong legs of the trade and not the weak ones. On the weak legs, transporting containers is almost free," said Hoffmann.
On a positive note, intra-Asia trade is said to be expected to grow in 2017 by slightly more than the almost 3 percent seen for 2016.
Earlier this month, Ship & Bunker reported that Eddie Huang, managing director of Glory - Pacific Shipping (S) Pte. Ltd. (Glory Pacific Shipping) says increasing bunker prices in 2017 will put more pressure on already challenged dry bulk vessel operators.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 624.50 | 1.00 | 732.00 | 8.50 |
| Rotterdam | 571.00 | 3.00 | 758.00 | 16.50 |
| Houston | 591.50 | 4.00 | 760.00 | 5.50 |
| Fujairah | 629.00 | 0.50 | 877.50 | 3.00 |
| Global 20 Ports Average | 637.00 | 0.00 | 819.00 | 3.00 |
| Global 4 Ports Average | 604.00 | 0.00 | 782.00 | 5.50 |
| Global Average Bunker Price | 688.00 | 2.50 | 879.00 | 1.00 |
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