Eastport revises up 2020 freight increase to cover higher bunker costs
28 March 2019
Eastport Research & Strategy has revised up our projections for freight increases to cover higher bunker expenses due to the IMO 2020 regulations. The price spread between our 0.5% proxy fuel and high sulphur fuel has widened about USD 40/mt since mid last year and the futures market points to another USD 13/mt increase in 2020. The synthetic 0.5% fuel oil proxy is based on a 1:7 ratio of 3.5% IFO 380 and 0.1% MGO. With higher low sulphur bunker values in 2020, freight revnues to to rise to offset costs. To maintain current TCEs in the long-haul, we calculate that freights are likely to climb 16%. For the short-haul lanes, 13% is required to outpace the a 43% jump in bunker costs.