en.Weodoany.com Report on Mar 27th, Taiwan, China's Yang Ming Marine Transport stated that soaring fuel prices will have a favorable impact on this year's Trans-Pacific annual contract negotiations. At a recent press conference, Yang Ming President Kevin Lee revealed that the company will implement a fuel surcharge starting April 1st to cope with cost pressures brought by rising crude oil prices.
The fuel surcharge will be adjusted based on route length, with longer routes incurring higher surcharges. According to data from the Baltic Exchange, as of yesterday, the prices for very low sulfur fuel oil in Singapore, Zhoushan, Rotterdam, and Houston were $841, $896, $723, and $798 per ton respectively. Although prices have retreated from recent highs, they remain nearly double the previous levels.
Kevin Lee stated, "Fuel costs account for about 17% of our total costs, but over 60% of our fleet is equipped with scrubbers, allowing the use of cheaper high-sulfur fuel oil to reduce expenses." Currently, it is the annual Trans-Pacific route contract negotiation period. Yang Ming expects this year's contract rates to exceed last year's levels, with contracts expected to be signed gradually starting from mid-April.
Regarding the impact of the situation in the Strait of Hormuz on shipping, Kevin Lee responded that currently over 150 container ships are stranded in the Persian Gulf, occupying approximately 500,000 TEU of capacity, accounting for about 1.5% of global shipping capacity. Yang Ming's Persian Gulf service is part of the Premier alliance, which will redeploy vessels to routes serving the US, Northern Europe, and the Mediterranean.
Kevin Lee added, "The global container fleet's idle rate is less than 1%. Despite last year's oversupply of vessels, the supply-demand gap is expected to narrow this year." Yang Ming management also pointed out that port congestion has intensified, particularly in South Asia and Europe, which could have a positive impact on shipping lines. European ports have long suffered from congestion due to weather and structural issues, and if the situation changes, it could potentially affect Asian ports.
