Help Desk -
9958816305, 9810335381

BHP Update and Outlook on Maritime Freight

Logistic News - Published on Wed, 26 Feb 2020

Image Source: Marine Logik
Global mining giant BHP said The dry bulk maritime freight industry has concluded a three year ‘era’ where the major focus of ship–owners was on re–establishing profitability through operating cost competitiveness and discipline with respect to fleet growth. The new era will be about sustainability, as highlighted by the introduction of the IMO 2020 low Sulphur fuel regulations on January 1, 2020. Early indications are that the maritime value chain was, in general, quite well prepared for the change. Some of the anxiety leading into the shock related to the level of preparedness of the refining community. While prices for low Sulphur fuel oil have certainly increased, and refining spreads have widened, we have not directly experienced, or heard of, any major LSFO availability constraints hindering the ability of ships to comply with the regulations.

It said “We remain entirely supportive of the IMO’s decision to limit the amount of sulphur present in marine fuels. Somewhat further down the line, the global maritime industry, which is a major GHG emitter, will also be required to halve its total emissions by 2050 versus a 2008 baseline30. Given the immensity of that challenge, we are encouraged by the proposal to establish an International Maritime Research and Development Board (IMDB, not to be confused with 1MDB) under the IMO umbrella. The IMDB’s proposed mandate is to pursue technological solutions that will help accomplish this ambitious abatement goal. Ensuring that the membership of the IMRB is inclusive and representative of the entire maritime eco–system will be an important ingredient contributing to its ultimate success.”

It said “We had estimated that IMO 2020 would add between $1–2/t to WA–China freight & $3–4/t to Brazil–China. With about six weeks of evidence to hand, those estimates look to be reasonably close to the mark, based on how spreads between compliant LSFO and the old 3.5 per cent bunkers have evolved. An outward Brazilian voyage using ‘scrubbed’ high sulphur fuel oil will be more competitive than the $3–4/t cited above based on prices at the time of writing.”

It added “Turning to more strategic time horizons, as we move into the middle and latter half of the current decade, an intense period of fleet replacement is scheduled to occur. This is the ‘demographic shadow’ of the shipbuilding boom that coincided with the China–fuelled commodity super cycle. This replacement wave offers a unique opportunity to dramatically alter the technological and environmental profile of the dry bulk fleet within a little over half a decade. If the participants in the industry get this right, perhaps utilising the future endeavours of the IMDB proposal discussed above, the steep task of halving shipping emissions by 2050 may not seem as far off as it does today.”

Source :

Posted By : Nishith Sharma on Wed, 26 Feb 2020
Related News from Logistic segment