Fuel prices soar, sea freight companies' costs soar

According to data released recently by the global maritime consulting firm Sea-Intelligence, after the outbreak of the Russian-Ukrainian conflict, fuel prices have soared, and the additional cost of sea freight companies has reached 2.5 billion US dollars.

According to Sea-Intelligence, based on the annual fuel consumption of the container shipping industry of about 64 million tons, the current daily increase in fuel costs is close to 40 million US dollars. If ship fuel prices remain at their current high levels, sea freight companies will add more than $10 billion a year to their costs.

It is understood that the global average price of very low sulfur fuel oil (VLSFO) in early June reached $1,030 per ton, a record high. Most of these costs will be charged to cargo owners by sea freight companies in the form of fuel surcharges.

Average fuel surcharges on major global routes have risen by 50 percent since the start of the year due to rising fuel prices, according to freight benchmarking platform Xeneta.

Sea-Intelligence also said that rising fuel prices may have the following two impacts.

On the one hand, the shipping industry may consider changing the price structure of fuel; on the other hand, it will accelerate the pace of decarbonization of the entire industry.

Sea-Intelligence further explained: “Higher fuel prices have the same effect as a carbon tax, improving fuel efficiency in the short term and encouraging the industry to invest in greener marine fuels in the long term.”

Others in the industry believe that freight rates will continue to remain high as rising fuel prices put pressure on transportation costs.

Junqing Logistics solemnly promises to our customers that it will solve customers' transportation problems at the most advantageous price.