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Costs to soar as BAFs pile on with IMO 2020 looming: Drewry

CONTAINER shipping costs will soar later this year as bunker adjustment factors (BAF) pile on to cope with the mandatory use of new low-sulphur fuel from January 1, reports New York's FreightWaves

Costs to soar as BAFs pile on with IMO 2020 looming: Drewry

CONTAINER shipping costs will soar later this year as bunker adjustment factors (BAF) pile on to cope with the mandatory use of new low-sulphur fuel from January 1, reports New York's FreightWaves

06 September 2019 - 19:00

CONTAINER shipping costs will soar later this year as bunker adjustment factors (BAF) pile on to cope with the mandatory use of new low-sulphur fuel from January 1, reports New York's FreightWaves.

The BAFs shippers will face from container lines 'will soar between 4Q19 and 1Q20 first and will be very volatile in the first half of 2020', said London's Drewry Maritime Research.



That's when the new International Maritime Organisation (IMO) regulations will kick in January 1 and are expected to push up prices.



Despite this the IMO has warned that compliance with the regulations will be strictly monitored 'on and after January 1, 2020'.



Drewry said that over July and August, prices for low-sulphur fuel compliant with IMO 2020 were already 'about 30 per cent' more than the current high-sulphur IFO380 fuel at Asian ports that have started selling it.



'The demand for low-sulphur fuel will increase considerably by November/December and market conditions will be very different then,' said Drewry.



'We believe that the chances are that low-sulphur bunker prices will, after increasing in 2020, fall in 2021 and 2022 as the initial price premium decreases.'


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