IMO2020 to hike bunker cost by 50%

Bunker costs per TEU would increase by more than 50% from January 2020 as a result of the International Maritime Organisation’s (IMO) 2020 low sulphur compliance law, transport economists MDS Transmodal revealed yesterday.

According to its bunker adjustment factor (BAF) calculator, MDS suggests that a switch from IFO380 (intermediate fuel oil) to MGO (marine gas oil), on a benchmark Far East-Europe service using 18 500-TEU ships, would increase the bunker price per TEU.

“We estimated an increase of $62 for the head haul direction and $39 for the backhaul direction.”

An increase of this magnitude might create conflict, MDS noted.

“This level of increase will in itself lead to heated negotiations as shippers seek to avoid additional costs and the lines look to protect their bottom lines.”

MDS managing director Chris Rowland encouraged shippers to make use of the BAF calculator to level expectations.

“We want the whole market to have access to an independent and transparent source of data on bunker costs for containers as the IMO2020 deadline approaches,” Rowland said.

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