Global shipping consultant Drewry said in response to the concerns and needs of beneficial cargo owners (BCOs) ahead of the IMO 2020 global emission regulation it has added a BAF formula and fuel cost benchmarking service.
Drewry said it developed an IMO low-sulphur rule cost-impact calculator based on robust market data, benchmarked BAF charges and fuel cost differentials between loops and carriers.
“With the compliance window to the IMO’s low-sulphur rule change in January 2020 rapidly closing, our analysis of the topic has highlighted widespread unease and uncertainty among shippers,” said Philip Damas, head of Drewry Supply Chain Advisors.
Drewry said its recent survey of global shippers and freight forwarders found three-quarters of respondents had yet to receive information from their carriers on how they planned to recover the fuel cost increases widely anticipated to accompany the regulatory change. More than half did not consider their service providers’ existing approaches as either fair or transparent.
“These research findings are amplified by the complexity of the issues in play, the cost recovery models, the lack of cost transparency, etc.,” Damas said. “Thorough preparation, information-sharing and changes to fuel charge contractual terms are now required.”
Drewry said the new cost impact calculator responds to these concerns through a range of fuel cost verification services alongside its existing freight procurement and cost benchmarking products to help medium and larger BCOs better understand their fuel cost exposure and mitigate future cost increases.
Based on independent “futures” prices, low-sulphur marine fuel prices per tonne reportedly will be 55 percent higher than current high-sulphur fuels, and Drewry considers that the probable worst-case scenario is that fuel costs paid by carriers and fuel surcharges paid by shippers in global container shipping will increase by 55 percent to 60 percent in January 2020.
Drewry said it is working with other shipper groups to obtain more information on current versus the likely post-IMO fuel consumption mix. It also has requested detailed fuel data and BAF policy information from several carriers.
Drewry said it developed an IMO low-sulphur rule cost-impact calculator based on robust market data, benchmarked BAF charges and fuel cost differentials between loops and carriers.
“With the compliance window to the IMO’s low-sulphur rule change in January 2020 rapidly closing, our analysis of the topic has highlighted widespread unease and uncertainty among shippers,” said Philip Damas, head of Drewry Supply Chain Advisors.
Drewry said its recent survey of global shippers and freight forwarders found three-quarters of respondents had yet to receive information from their carriers on how they planned to recover the fuel cost increases widely anticipated to accompany the regulatory change. More than half did not consider their service providers’ existing approaches as either fair or transparent.
“These research findings are amplified by the complexity of the issues in play, the cost recovery models, the lack of cost transparency, etc.,” Damas said. “Thorough preparation, information-sharing and changes to fuel charge contractual terms are now required.”
Drewry said the new cost impact calculator responds to these concerns through a range of fuel cost verification services alongside its existing freight procurement and cost benchmarking products to help medium and larger BCOs better understand their fuel cost exposure and mitigate future cost increases.
Based on independent “futures” prices, low-sulphur marine fuel prices per tonne reportedly will be 55 percent higher than current high-sulphur fuels, and Drewry considers that the probable worst-case scenario is that fuel costs paid by carriers and fuel surcharges paid by shippers in global container shipping will increase by 55 percent to 60 percent in January 2020.
Drewry said it is working with other shipper groups to obtain more information on current versus the likely post-IMO fuel consumption mix. It also has requested detailed fuel data and BAF policy information from several carriers.