Fossil fuel is the most important raw material in the shipping industry. According to statistics, fuel costs account for about 20% to 40% of the cost of shipping companies. Fuel oil price fluctuations are directly related to the benefits of shipping companies. Since 2021, international crude oil prices have continued to rise, especially the outbreak of the Russia-Uzbekistan conflict in the first half of 2022, which has further pushed up oil prices, and the price of marine fuel oil has approached historical highs, causing a major impact on the stable operation of the shipping industry.
1. Fuel oil trend analysis
In 2021, the global economy has entered the recovery stage after the outbreak of the new crown epidemic. The economic boosting policies of various countries have taken effect, and global energy demand continues to increase. The price of British Brent international crude oil has risen from US$51/barrel at the beginning of the year to US$77/barrel. In early 2022, the conflict between Russia and Ukraine broke out, coupled with OPEC+'s difficulty in increasing production and the continued decline in US inventories, the global energy supply is expected to intensify, and the price of Brent crude oil continued to rise to US$113/barrel. In this context, marine fuel oil rose rapidly, hitting a new high in ten years. On March 30, the price of high-sulfur 380CST fuel oil for bonded ships in Zhoushan reached US$710/ton, an increase of nearly US$200/ton, or 39%, from the beginning of 2022, and an increase of US$330/ton, or 87%, from the beginning of 2021.
From the perspective of future market development, many countries around the world have entered the stage of herd immunity, which has promoted the further recovery of terminal consumption. The demand for crude oil has maintained growth, which has played a supporting role in the continued rise of oil prices. It is expected that the overall international oil price in 2022 will be higher than that in 2021, and the price of marine fuel oil will continue to remain high.
2. Analysis of the impact on shipping companies
In the short term, rising oil prices will inevitably lead to increased transportation costs for companies, thereby weakening their profit margins. In the long run, in order to absorb the pressure brought by rising costs, shipping companies usually increase the freight rate to pass the fuel cost to the downstream cargo owners, which makes the market freight rate level continue to rise and the transaction cost rises sharply, thereby weakening the market transportation demand and affecting the economy and trade. scale.
(1) The proportion of fuel costs has increased
In the past two years, the proportion of fuel costs of both shipping companies and inland water transport companies has shown an expanding trend.
Inland water transport: Taking 1000-1200 tons of inland river ships as an example, the fixed route completes 5 voyages per month, and the single transportation distance is about 170 kilometers. Based on the current Sinopec 0# diesel oil 8.32 yuan/liter, the monthly fuel cost is about 3.4 ten thousand yuan. The proportion of fuel costs has risen from 20% at the beginning of 2020 to about 30% currently.
Ocean transportation : According to statistics from the Shipping Economy Monitoring Platform, fuel costs will account for 29.8% of the main business costs in 2020 (27.7% in 2017). According to enterprise surveys, in 2021 Ningbo and Zhoushan shipping companies' fuel costs accounted for basically 40%, and some companies accounted for more than 50% due to their older ships. Some companies said that according to the current rising trend of oil prices, the cost of fuel oil for a dry bulk carrier operating on a domestic trade route (about 150-180 days of annual voyage) in 2022 will be compared with that in 2021. An increase of 5 million yuan is expected.
(2) Corporate profit margins narrow
In the early stage of oil price rise in 2021, the market freight rate will also rise due to the increase in market transportation demand, and corporate profits will remain at a good level. In 2022, affected by factors such as environmental protection policies, repeated epidemics, and suspension of work during the Spring Festival, the market demand will not be as good as the previous period, and the rise in freight rates will be weak At the same time, oil prices continued to rise, leading to continuous compression of corporate profit margins. According to data from the Shipping Economy Monitoring Platform, the profit margin of monitored companies in February 2022 was only 8.4%, which was a large decline compared with January 2022 (19.2%), the same period last year (15%) and the overall level of last year (17.8%).
3. Related suggestions
(1) Promote the transformation and upgrading of the industry and enhance the competitiveness of local enterprises. Accelerate the elimination of old ships, promote energy-saving and environmentally friendly ships, and promote the transformation of ship shore power receiving facilities. Cultivate enterprises' awareness of energy saving and carbon reduction, guide enterprises to optimize management processes, publicize ship energy-saving technologies, improve fuel reserves, route planning, speed control and other aspects, reduce fuel consumption, and enhance corporate competitiveness.
(2) Strengthen the monitoring and analysis of bulk commodity prices. Fully improve and utilize the bulk commodity price monitoring and analysis mechanism, closely track and analyze changes in key factors such as price, supply and demand, and cost, study the deep-seated relationship between bulk commodity prices and transportation market prices, strengthen market tracking and research, predict price trends, and increase The oil price information of each port is collected and released to enterprises on a regular basis to facilitate business decision-making.
(3) Give full play to the linking role of industry associations. Relying on industry associations and joint enterprises to carry out centralized procurement of fuel oil, give full play to the scale effect, conduct research on pricing mechanisms, incorporate oil price fluctuations into the scope of contracts, realize the linkage of oil prices and freight rates, dynamically adjust prices for emergencies and special periods, and enhance the discourse of shipping companies rights, to avoid blind bargaining by enterprises, and to promote the healthy development of the industry.