Drewry and the ESC have defined and published a simplified BAF indexing mechanism and bunker charge guide to help shippers monitor and control bunker charges as shipping lines switch to the more expensive bunkers required under the IMO 2020 low-sulphur regulation.
The aims and principles of the indexing mechanism are:
As we begin the countdown to the 2020 regulatory deadline, we identify some of the issues worth closer scrutiny and offers tips to help you improve fuel clauses in 2019 contracts. For assistance with designing your own fuel charge programme contact us at email@example.com
A Drewry survey of global shippers and freight forwarders completed in Sept 2018 found that three quarters of respondents had yet to receive information from their carriers on how they planned to recover the fuel cost increases widely anticipated to accompany the regulatory change. More worryingly, over half of respondents did not consider their service providers’ existing approaches as either fair or transparent.
The need for clear understanding and transparency cut to the very heart of the matter. In responding to the concerns of shippers, we have developed a new range of fuel cost verification services alongside our freight procurement and cost benchmarking products to help medium and larger BCOs better understand their fuel cost exposure and mitigate future cost increases.
In cooperation with both shipper members of the Drewry Benchmarking Club, and other parties, we have now developed an IMO low-sulphur rule "Cost Impact Calculator" based on robust market data and benchmarked BAF charges, looking at fuel cost differentials between loops and between carriers.
Drewry is currently working with other shipper groups to obtain more information on current versus the likely post-IMO fuel consumption mix. Detailed fuel data and BAF policy information has already been sourced from several carriers to incorporate in these new models.
To discuss participation in Drewry’s IMO fuel cost initiative, contact us: