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Less guesswork concerning post-IMO 2020 marine fuel

Shippers, forwarders and carriers are getting a better idea of costs and data sources as Drewry launches a low-sulphur bunker price tracker.

For years, one of the biggest and hardest questions to answer in international shipping has been; what will the new low-sulphur fuel costs from 2020?

Everybody – or nearly everybody – agreed that there will be a large, extra cost for the industry and its users. But shippers surveyed by Drewry on the IMO 2020 issue admitted that “data is patchy and confusing” and a high proportion of shippers replied that they were very uncertain about the impact of IMO 2020 on their freight costs.

Largely as result of this, Drewry developed an IMO Cost Impact Calculator, but this required us making our own forecast of the 2020 cost of low-sulphur fuel, because there is no established price in the market for the new fuel.

This is changing.

In July and August, early indications of prices for low-sulphur fuel oil 0.5% compliant with the IMO 2020 rule showed that the new fuel costs about 30% more than the current, high-sulphur IFO380 fuel at Asian ports which have started selling it. This price is based on actual bunkering transactions for ships which trade with Chinese ports, where the 0.5S requirement is already implemented. The low-sulphur 0.5S price in the major port of Singapore is about $560 per tonne (see chart).
Source: Drewry

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