22 January 2013 17:34 [Source: ICIS news]
LONDON (ICIS)--Freight rates on shipments from Baltic Sea ports could increase dramatically next week if cold weather leads to ice-class vessels being required, base oil traders said on Tuesday.
Restrictions on the type of vessel permitted to operate in the region are expected to be introduced next week, and the result could be an increase in freight rates of over 40% for certain routes.
As one trader said, ice-class vessel owners will not want their ships to stray too far from the region affected by ice, where they will be able to change higher rates. It could mean that for a journey to a destination like West Africa – a popular route for base oils leaving the Baltic Sea – a charterer will have to move its cargo to northwest Europe in an ice-class vessel, and then perform a ship-to-ship transfer to a regular vessel for the rest of the journey.
At present, the cost of moving a cargo of approximately 8,000 tonnes from the Baltic Sea to West Africa is $85-90/tonne (€64-68/tonne).
An ice-class vessel into Amsterdam, Rotterdam or Antwerp could cost $45-50/tonne, with the second leg of the journey in a regular vessel costing around $75-80/tonne, said a trader. This means the total cost could increase to $120-130/tonne.
Traders remember a similar situation last year, when ice not only increased freight rates, but also caused delays to shipments because there were not enough ice-class vessels available.
“This happened last year, and we saw freights increase by 30-50%,” said one trader.
($1 = €0.75)
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