InterviewHigh oil pressures shipping costs

02 January 2008 22:54  [Source: ICIS news]

By Al Greenwood

HOUSTON (ICIS news)--Chemical shipping costs could rise quickly under floating-rate contracts to be adopted by interrnational carriers in response to volatile crude oil prices, a shipping executive said on Wednesday.

For much of 2007, carriers absorbed much of the increase in fuel prices because they operated under fixed agreements, said Thomas Keene, vice president of BDP Transport, a subsidiary of BDP International.

"They were slow to react in 2007," he said in an interview.

Such price absorption will no longer be the case this year with oil hitting $100/bbl, Keene said.

"It is incredible what the upswing has been," Keene said. "It is a huge impact to anyone's transportation costs."

To absorb the price increases, contract agreements will require floating rates, he said.

"The carriers will no longer absorb the spiralling fuel increases - it's that simple," Keene said. "They will pass it along much quicker."

By contrast, costs for US trucking will not rise substantially, since the industry has more flexible agreements, he said.

By: Al Greenwood
+1 713 525 2653

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 28 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly