Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: For vessel owners, there has been no joy to the start the 2020 marketing season. The last six week have been brutal. Fuel costs have risen and the cost of installing scrubbers has increased operating costs, but freight markets have not provided needed compensation for any of this. The cost to retrofit scrubbers is estimated to be $4-5 million for a very large ship. The installation cost for a new-built vessel is least at around $3 million. Alphaliner estimates that 95 container ships are currently inactive as they have scrubbers installed. Container shippers have been partially successful in adding Environmental Fuel Fees (EFF) surcharges to their short-term contracts (less than three months) and Bunker Adjustment Factors to long-term contracts. But Dry-Bulk shippers have been depending on market forces for assistance, but markets have been unsympathetic. The industrial slow down in China and the tariff wars have been primarily to blame for this.
