Shipping Costs On The Rise

Shipping Costs On The Rise
September 21, 2018 Hannah Marshallsay
Maersk BAF

As a follow up to our previous news post on managing the rising cost of fuel, we look at how the global sulphur fuel cap is beginning to make an impact.

In our previous news post we informed our customers that shipping fuel costs were likely to rise when a change in regulations in 2020 forces shipping lines to switch to lower sulphur, but higher cost, fuels. We anticipated that the impact of a global sulphur cap, which mandates the use of fuel with a sulphur content of 0.5% instead of 3.5% would inevitably result in the cost of shipping increasing.

In preparation for the change in sulphur regulations and in an effort to make the fuel element more transparent, Maersk Line announced this week plans to separate the bunker (fuel) element of the freight rate from the freight cost. This change will be introduced from January 2019.

Maersk’s plan is to isolate the cost of the average fuel price in key bunkering ports around the world, which will then be subject to a quarterly review based on the cost development.

As we approach Q4 it is likely that other shipping lines will make similar announcements designed to limit the exposure of fuel cost escalation. At PFE we are acutely aware of the need for cost certainty and will endeavour to keep you informed of any further industry announcements as and when information becomes available.

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