Tankers that were scheduled to mount emissions-cutting gear ahead of stricter pollution standards starting in 2020 have delayed their visits to the dry docks to capitalize on an unexpected hike in loads rates, three trade sources mentioned.
The U.S. penalties on units of vast Chinese shipping line Cosco in September sparked a hike in global oil shipping charges as traders scrambled to find non-blacklisted containers to get their oil to market.
The rates for establishing a supertanker from the U.S. Gulf Coast to Singapore hit record highs over $17 million and a record $22 million to China earlier this week.
By comparison, before the sanctions, delivery crude from the U.S. Gulf to China cost around $6 million-$8 million.
The extraordinary hike in freight charges proved too useful to overlook for some shipowners who were due to ship vessels to the dry docks for lengthy retrofitting and upkeep work.
The scarcity of ships to move crude oil was so intense that some shipowners shifted from carrying refined fuels like gasoline to ‘dirty’ loads that include crude oil, despite the costs of having to clean them later.
Beginning Jan. 1, 2020, the International Maritime Organization orders the use of marine fuel with a sulfur limit of 0.5%, down from 3.5% currently, considerably inflating shippers’ fuel payments.
Only ships installed with costly exhaust cleaning tools, known as scrubbers, which can take away sulfur from emissions, will be allowed to proceed to burn cheaper high-sulfur fuels.
For scrubbers to be fitted, ships have to be sidelined between 30 to 60 days.
While freight charges have abruptly come off their recent highs, shipowners can still profit from the higher fees.