By Alison Koo (The Loadstar) – The impact of bunker fuel on shipping rates has started to affect the intra-Asia market, with average rates seeing a 10% increase in the last two weeks.
Drewry’s Intra-Asia Container Index reported that as of Friday, rates averaged $675 per twenty-foot equivalent unit (feu), not including terminal handling fees.
The biggest rise was in the Shanghai-Singapore route, where the rate jumped 18% since March 13, reaching $746 per feu. Following that, the Busan-Shanghai route increased by 13%, now costing $53 per feu.
Bunker prices in Asia are generally higher than those in Europe and the US because the region mainly relies on fuel oil imports from the Middle East. The Strait of Hormuz was closed after hostilities erupted between the US, Israel, and Iran on February 28, disrupting the flow of about 20% of the world’s oil supply.
Additionally, Asia depends on Middle Eastern refineries for very low sulphur fuel oil (VLSFO), which is the primary marine fuel used.
Refiners in Asia, especially in India and East Asia, are experiencing shortages of heavy-sour crude, which is essential for producing high-sulphur fuel oil (HSFO). This has led to lower refining activity and reduced output.
The price difference between VLSFO and HSFO has expanded to over $100 per tonne, increasing costs for ships that do not have scrubbers.
According to reports, some bunker suppliers and major oil companies have declared force majeure on fixed-price sales contracts, making ship operators pay higher spot prices. As a result, shipping companies are adjusting their freight prices to account for the increased fuel costs.
Clarksons noted that container ships are managing the situation by reducing their sailing speeds by 2% starting in 2026, as VLSFO prices have now more than doubled since before the conflict.
However, intra-Asia freight rates are not rising as quickly as those on other routes. This is due to shipping capacity being redirected from the Persian Gulf to South and Southeast Asia.
Drewry senior consultant Stijn Rubens mentioned that about 1.5% of the fleet is currently in the Persian Gulf, which reduces available capacity. This will result in inconsistencies in weekly schedules and an increased need for transshipment at nearby hubs, likely causing congestion at transshipment centers like Oman and Khor Fakkan, as well as alternative ports such as Jeddah, Turkey, and Pakistan. These inefficiencies will further reduce the effective capacity of the fleet. As a secondary effect, carriers might opt to allocate vessels from Middle Eastern routes to different routes.