Coronavirus: Freight capacity could become ‘biggest obstacle’ in March-April

February 14, 2020

A freight capacity crunch is likely this spring that could seriously hinder a return to normal international trade flows and now looks likely to disrupt global supply chains until April and potentially beyond, according to DHL.

In its latest update on the coronavirus outbreak in China, published yesterday, DHL’s Resilience 360 supply chain risk management platform warned: “While companies draw up contingency plans for production activities, supply continuation, and logistics services to cope with this complex and fast-changing situation, the crisis now looks (likely) to disrupt global supply chains until April and potentially beyond.

“While production-related challenges may be overcome in the coming weeks, limited inbound and outbound freight capacity could become the biggest obstacle in the months of March and April for supply chains to normalize. Chinese media organizations have put forward March 1 as the date when production schedules could return to near-normal operations; however, this will largely depend on when the outbreak will peak.”

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Source: Lloyd’s Loading List

Ocean Carriers Waste No Time Trying to Recoup IMO 2020 Costs

January 28, 2020

Price swings in the largest market for marine fuel are filtering down the supply chain as major ocean carriers ask customers to cover costs for using low-sulfur fuel blends.

Maersk last week said in a customer advisory that ocean freight tariffs across all trade lanes will increase by $50 to $200 per forty-foot equivalent unit (FEU) starting March 1 due to a price spike for low-sulfur fuel in Singapore. The International Maritime Organization mandated fuel with a 0.5% sulfur cap be the global standard effective this year.

The “trigger” for the tariff surcharge, Maersk said, is a swing in fuel prices in the largest global marine fuel market. Low-sulfur fuel prices increased “substantially” in Singapore, exceeding $700 per metric ton, more than 20% higher than previous benchmark fuel prices.

“The average increase in January thus is expected to exceed $50 per metric ton,” Maersk said.

Hapag-Lloyd is also said to be considering a similar surcharge, according to ShippingWatch, although its surcharge amount has not yet been determined.

Yet in the same week that Maersk announced the new surcharges, Singapore fuel oil prices dropped close to $100 per metric ton, from a Jan. 7 peak of $740 per metric ton to $641 on Jan. 22, according to international shipowner association BIMCO.

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Source: American Shipper

A Conference on IMO 2020 Impact Shows How Many Questions Remain as New Rule Approaches

October 24, 2019

In a room full of people who will be more deeply affected by the upcoming IMO 2020 rule than just about anybody else in the global economy, the speakers and audience at a Miami conference had few definitive answers on how markets will play out when the new rule goes into effect January 1.

The Argus Fuel Oil conference, produced by commodity data and news publisher Argus Media, theoretically focused on all uses of fuel oil. But there’s only one issue for this crowd – the IMO 2020 rule that will require that marine fuels meet a new sulfur specification globally of 0.5% after being limited to the 3.5% sulfur level found in high sulfur fuel oil (HSFO).

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