Logistics failures cause hike in VLSFO prices

Refueling at sea. Credit: Getty Images

Bunker barge bottlenecks have caused supply shortages and difficulties hiking up prices of very low sulphur fuel oil (VLSFO) in ports.

The first three weeks of January have appeared chaotic for smaller shipping outfits attempting to source supplies of low-sulphur fuel.

In stark comparison, larger shipowners and companies planned better for the transition and secured barges through direct contracts, commented Svend Moholt, chief operating officer of Danish bunker supplier Monjasa. “With barge availability and logistical issues with the number of vessels wanting to bunker at different terminals, this imbalance in supply and demand has translated into premiums and pricing structures that are not reflective of a balanced market.” Moholt concluded.

The port of Singapore has been impacted, with reports that Pacific International Lineshas had six 6,600 teu and 1,500 teu boxships anchored in Singapore since the beginning of January due to the unavailability of VLSFO bunkers.

There are similar issues in the Mediterranean, according to Tommaso Panzeri, project manager at Bunker Energy, who has seen vessels being diverted from Malta to supply ports with fuel. “The difficulty finding compliant product and the lack of barge tankage has caused a dramatic increase in demand that found many bulker suppliers unable to satisfy.” said Panzeri.

Throughout the first quarter of 2020 supply and pricing fluctuations are expected to continue, but the market is anticipated to stabilise afterwards.