It is now estimated that instead of the usual five days, it now needs two weeks to book a barge in Singapore; any delays are expected to send freight rates higher, in particular for tankers, where tonnage has been tight recently.
What is more, according to Bloomberg, ship owners are now being asked to pay more due to the shortage, with premiums for high-sulfur fuel oil over Singapore benchmark prices doubling to $8 to $10 a ton since September.
In fact, the availability of refueling barges has dropped as their tanks are scoured so that they will be able to carry cleaner-burning fuels compliant with the IMO 2020, coming into effect on January 1st, with almost 20% of the more than 300 high-sulfur barges that service the harbor have switched to supplying low-sulfur fuel oil.
Bloomberg informs that there are few alternatives to beat the congestion as nearby ports in Malaysia are also preparing for the rule change and cleaning their bunkering vessels.
In April, ahead of the 2020 sulphur cap, MPA Singapore warned captains and owners of ships that are caught burning non-compliant fuel, that they could face up to two years in prison. In addition, other penalties can also take place, such as a fine of up to S$10,000 ($7,400).
In July, it was said that Singapore has stocked up LSFO ahead of 2020 sulphur cap. Reuters reported that this move has increased lease rates for tank storage in Singapore, as well as the number of supertankers floating in Singapore and Malaysian waters. The latter has been taking place because traders were then expecting a spike in prices for low-sulphur fuel oil (LSFO).
It was then said that the lack of space on onshore tanks, in addition to technical storage issues, has led traders to store the oil product on very large crude carriers (VLCCs) off Singapore and Malaysia.