Drewry Supply Chain Advisors has launched a range of fuel advisory and management services designed for shippers and forwarders.
The new services extend Drewry’s advisory capability at a time when fuel is becoming an increasingly important part of transport costs as a result of growing regulations. Philip Damas, head of Drewry Supply Chain Advisors, explained: “Following implementation of the IMO 2020 low-sulphur rule change we have already seen extreme variations in fuel charges between carriers on the same trade lane, for similar ship sizes - even shared vessels.
“On the Asia-to-US East Coast route, for example, across a sample of five carriers, we saw some had increased their BAFs [bunker adjustment factor] by as much as 40 percent in Q1 2020, whereas others by just 15 percent.”
Drewry has been working closely with shippers and industry representative organisations such as the European Shipper’s Council (ESC) in recent months on a number of initiatives aimed at improving fuel cost transparency and contractual practices, so that shippers can reduce their exposure to excessive BAFs and have greater control over and understanding of the fuel portion of ocean freight rates.
“We anticipate confusion over the new charges introduced by carriers will continue for some months yet as the market fully adapts to the new fuel standard,” added Damas. “By helping review their existing processes and implement a standard BAF mechanism, covering measurement and adjustment periods, fuel prices and index formulae, we believe shippers and forwarders can gain both clarity and more control over fuel prices - essential pre-requisites to achieving more competitive and successful outcomes from their carrier negotiations.”