Drewry launches low sulphur fuel cost impact calculator for shippers

With shippers increasingly concerned about liners’ planned bunker surcharges ahead of the global sulphur cap consultancy Drewry has introduced a new BAF formula and fuel cost benchmarking service.

In cooperation with both shipper members of the Drewry Benchmarking Club and other parties, Drewry has developed an IMO low-sulphur rule Cost Impact Calculator based on 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.

A recent survey of global shippers and freight forwarders conducted by Drewry found that more than half of respondents 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,” said Damas. “Thorough preparation, information-sharing and changes to fuel charge contractual terms are now required.”

The new Cost Impact Calculator responds to these concerns through a new range of fuel cost verification services alongside Drewry’s 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 will be 55% higher than current high-sulphur fuels, Drewry is anticipating and the consultancy 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 55-60% in January 2020.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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