This intra-Asian market, which is characterised by mini-tremors and regular roller coaster rides, is known to be highly reactive to sudden variations in supply and demand.
The Shanghai-Busan route is operated by 2,000-4,000 TEU feeders, which are versatile, adaptable vessels which can be positioned quickly where demand requires. This explains the volatility of the market.
The move to IMO 2020 conditions, which depends mainly on the Singapore bunkering market in the Asia region, has forced ships to wait outside port before they can refuel. This situation, which has been created suddenly by the increase in demand, has had the effect of increasing prices for low sulphur fuel oil (LSFO) and, by the same token, freight rates.
We see today that the peak has already been passed and that LSFO prices in Singapore have started to settle after having broken the psychological USD 700 per tonne barrier just after the start of the New Year.
In terms of coefficients, the additional cost of Marpol surcharges in the intra-Asia trades is having a particular impact on the bill being paid by shippers since the surcharge can easily reach 30% of freight costs.
