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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.

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