With the new IMO 2020 start-date now less than a month away, maritime consultancy Drewry has published its first low-sulphur reference bunker index tracker.
The new index will be updated quarterly.
Philip Damas, head of Drewry Supply Chain Advisors, commented: ‘Our new low-sulphur bunker price tracker is intended to standardise, clarify and simplify the adjustment of Bunker Adjustment Factors (BAFs) between shippers and carriers or forwarders.
‘By streamlining the process and agreeing common bunker price measurement periods, BAF adjustment periods, fuel prices and index formulae, we hope to bring much needed clarity to the challenges presented by the regulatory change.’
Working with the European Shipper’s Council (ESC), Drewry has already published a simplified BAF indexing mechanism and bunker charge guide.
Commenting on how the market is currently adapting to the new fuel era, Damas said: ‘As was anticipated, prices for low-sulphur fuel appear to have settled some 35% higher than the old IFO 380 fuel standard.
‘Although temporary and transitional bunker charges were expected to apply to just spot rates and to contracts of less than three months, it is clear that some shippers with annual ocean freight contracts have been requested by their carriers to start paying the new IMO BAF from 1st December.’
Looking to the future, Damas added: ‘While uncertainty remains in the market, some carriers may choose to reduce their base rates and charge the “full BAF” in their next contracts.’