Bunker Fuel Oil: Important to Everyone, Not Just Shipowners
Today, the ocean shipping industry faces unique challenges involving the cost, quality and availability of bunker fuel oil. Fuel purchases can represent as much as 60 percent of a ship's operating costs thereby greatly affecting your charter rate. Your SPI Marine broker follows bunker fuel trends closely.
Bunker Procurement
Buying "bunkers" can be complex and intimidating for any shipowner. Getting timely quotes from various suppliers at ports, negotiating prices, setting term contracts and then deciding on the mode of purchase can be a minefield to navigate. Typically, tanker owners or their time charterers will make bunker purchase decisions based on the:
- Quality of bunkers available in the port
- Price of bunkers in the port
- Stack emission requirements at the next disport
- Amount of cargo to be loaded (Draft Restrictions)
Bad-quality fuel can do more than pollute the environment - it can also put a ship out of commission, and off-hire. Ultimately, if the machinery is damaged because of poor quality fuel, your cargo will be delayed.
Fuel prices can vary widely from port to port. Shipowners struggle to manage rising operating expenses directly associated with fuel costs. In fact, in some markets, the percentage of voyage revenue going to pay for fuel costs has almost doubled. And yet, with new calls for shipowners to burn cleaner fuels, those costs could bubble even further. Bunker prices that feel exorbitant today may well look like a bargain down the road.
Call your SPI Marine broker to see how you can manage the costs relative to bunker fuel prices. While in actual practice you may have little, if anything, to do with procuring bunkers for the vessels you charter, the type of fuels and the costs associated with those purchases have everything to do with the margins on your bottom line.