The supply and demand picture headed into the remainder of 2019 in the Trans-Pacific Trade lane is an evolving picture, with carriers’ determination to create favorable market conditions ahead of crucial 2019-2020 annual negotiations for contracts that will extend well beyond Jan. 1, 2020, when carriers will be forced to use higher priced low-sulfur fuel for the vast majority of the container ship fleet.
A growing consensus is that ocean carriers will withdraw further capacity. The Jan. 1 2020 implementation date of the IMO sulfur oxide emissions cap provides carriers with a significant cost that is expected to be billions in added costs from having to use low-sulfur fuel as of that date. There are early indications that carriers are taking a hard line in insisting on recouping these costs. At this time we believe the market will start to see upward price pressure as early as the 4th quarter of 2019, into the first quarter of 2020, at least on bunker surcharges.
Alba urges our customers to be aware of the mandates that will require lower sulfur oxide emissions in fuel for ocean carriers, and to be aware of market pressures as a result.
Please see the below link to learn about the IMO Sulphur mandate.
Please contact your Alba representative for more info.
- Posted by Joe DeSilvetri
- On July 17, 2019
- 0 Comments