Will 2020 be a game changer for bunker credit?

The twin pressures of tough financial times for the shipping industry and the likelihood of more expensive fuel in 2020 are bringing the issue of bunker fuel bills into focus for the industry. Many shipowners and operators have gone through difficult times since the global economic crash of 2008. There have been numerous bankruptcies, heavy losses, and the revaluation of assets on balance sheets across the industry. This has not just affected small companies. Perhaps the most prominent failure of recent times was the Korean liner company Hanjin Shipping which some regarded as too big to fail, but which was ultimately declared bankrupt in early 2017. 2020 will be yet another pitfall for ship operators. Bunker fuel represents the most prominent voyage cost, and bills are set to increase substantially overnight, presenting a further stress point. At present 3.5% sulfur, 380 CST fuel oil makes up the lion’s share of bunker fuel sales. Once the IMO’s sulfur cap of 0.5% comes into effect in January 2020 the majority of ship operators will have to turn to more expensive fuels such as marine gasoil and very low sulfur fuel oil to remain compliant. Based on costs in July at the European… continue reading

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