Improving Freight Rates May Help Shippers Cope With Fuel Costs

Wednesday, September 29, 1999
The shipping industry is in a better position to cope with soaring fuel prices because of growth in trade as Asia recovers economic crisis, analysts said. The price of bunker fuel, which typically makes up about five percent of a shippers' total operating costs, has over the past six months doubled to $140 per ton. The spoils from improved conditions have not been evenly shared within the industry, with tanker owners the worst hit. Three global-pacts among oil producers to cut output and shore up prices have had a negative effect on tanker owners who now face higher bunker costs and lower shipping volumes. However, experts said, fuel cost is only a major issue if freight rates are on a decreasing trend, but with rates on a recovery, the impact on shippers will be lessened.

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