Seabury Maritime says transparency is key to mitigate IMO 2020 effects

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The US-based shipping advisory firm Seabury Maritime has called carriers and shippers to cooperate and enhance transparency between each other in an effort to mitigate the risks from transition in the post-2020 era.

In cooperation with Gemini, a shipper based in USA, Seabury has published a white paper which provides specific information about the metrics used in bunker calculations. According to the white paper, market participants are not in a position to clearly estimate the economic impact of the new regulations due to lack of information in regards with the cost to produce low-sulfur fuels as well as the limited information on the fuel surcharge calculations.

Nikos Petrakakos, the CEO of Seabury explains that carriers will not be able to absorb the additional cost since bunker expense represents more than 50% of the overall operating expenses and as a result the IMO 2020 regulations will impose a significant increase on the same. For example, the cost of a container which is shipped from China to a port in East Coast of USA will be increased by approximately 25-30%; from around $1,600 currently to approximately $2,200 after 2020.

As Seabury states in their whitepaper, transparency is very important for both the carriers and the shippers in order to create trust between each other and the shippers to feel comfortable that carriers will pass on to the shippers the additional costs in a reasonable and fair way. According to Seabury’s CEO, transparency is vital so as to enhance the relationship between the parties, eliminate customers’ push-backs, increase fuel efficiency and lower costs.

According to Petrakakos, on the other hand, the lack of transparency may lead to an adverse result for carriers simply because of the limited understanding from Shippers of the metrics used in bunker calculations. Seabury has advised shippers to accept the fact that additional operating expenses will be passed on to them and from their side to discuss with carriers what are the factors related with the additional expense.

The COO of Gemini, Kenneth O’ Brien, has mentioned that his company in cooperation with Seabury have identified all the risks and cost drivers related with IMO 2020 regulations and, he adds, the willingness to increase transparency to the issues related with price surcharges will help carriers and shippers navigate in the post-2020 era.

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