Regan Brown
The cost of fuelling an oil carrier can vary depending on several factors, including the size of the ship, the type of fuel used, the distance travelled, and the price of fuel at the time. For example, the CMA CGM Benjamin Franklin, one of the world's largest container ships, consumes 330 tonnes of fuel per day at an average speed of 25 knots, which would cost around $3,550,000 for a 14-day journey if using Very Low Sulphur Fuel Oil (VLSFO). On the other hand, the Queen Elizabeth II cruise ship burns through 433 tonnes of fuel for a six-day trip between New York and Southampton, costing about $2,000,000 if using VLSFO. According to one source, the largest cargo ship in the world fills up its fuel tank for approximately $14 million. With fuel costs representing up to 60% of total ship operating expenses, carriers are actively seeking ways to reduce consumption and explore alternative fuels.
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What You'll Learn
The cost of refuelling an oil carrier can be up to $16.5 million
The cost of refuelling an oil carrier can vary depending on several factors, including the size of the ship, the type of fuel used, and the efficiency of the ship's engine. For example, the CMA CGM Benjamin Franklin, one of the world's largest container ships, consumes 330 tonnes of fuel per day at an average speed of 25 knots. This amounts to $3,550,000 for a 14-day journey if the ship uses Very Low Sulphur Fuel Oil (VLSFO).
The price of fuel also fluctuates, with low-sulphur fuel oil (LSFO) costing around $600 per tonne, a significant increase from $460 just 12 months prior. This means that larger ships, which can consume up to 217 tons of fuel per day, can incur fuel bills of over $3 million for a single 28-day round trip.
To reduce fuel consumption and costs, some carriers have implemented operational adjustments, such as consolidating services through multi-carrier alliances and improving hull and propeller conditions to reduce resistance. Additionally, some ships use scrubbing technology to 'clean' exhaust gases and reduce sulphur emissions, although the cost-effectiveness of these systems have been debated.
With the high cost of refuelling an oil carrier, it is crucial for shipowners to carefully consider their fuel options and explore ways to improve fuel efficiency to minimise expenses and maintain profitability.
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Bunker fuel costs $552 per ton
The cost of bunker fuel is $552 per ton. This price is lower than that of low-sulphur fuel oil (LSFO), which is currently priced at $600 per tonne, up from $460 per tonne 12 months ago. Bunker fuel is a sludgy and sulfur-rich type of fuel.
The cost of fuelling a ship depends on the type of ship and service. For example, a large modern container vessel with a maximum container capacity of 7,750 TEUs (twenty-foot equivalents) or 3,875 FEUs (forty-foot equivalents) that consumes 217 tons of fuel per day would cost $3,353,952 for a single 28-day round trip. This cost could be greater if the voyage were longer, the vessel were less fuel-efficient, or if scheduling delays required speeding up.
Fuel costs can represent 50-60% of total ship operating costs. To address the excessive costs of fuel, carriers are making operational adjustments such as consolidating services through multi-carrier alliances and improving hull and propeller conditions to reduce resistance and improve efficiency.
The additional cost of switching from bunker fuel to LSFO for a 20,000 TEU ship would be $50,000 per day. While installing scrubbing technology to reduce emissions can cost around $8 million upfront, this investment could be recouped in just over six months.
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Low-sulphur fuel oil costs $600 per tonne
The cost of fuelling an oil carrier depends on several factors, including the type of fuel used, the size and fuel efficiency of the vessel, the duration of the voyage, and scheduling delays.
Low-sulphur fuel oil (LSFO) is one type of fuel commonly used in shipping. As of 2020, the cost of LSFO was around $600 per tonne, up from $460 per tonne in the previous year. This increase in fuel costs has had a significant impact on the shipping industry, as fuel can represent up to 50-60% of a ship's total operating costs. To put this into perspective, consider a vessel with a fuel consumption of 217 tons per day and a 28-day round trip voyage. At $600 per ton, the fuel bill for this single voyage would be $3,353,952.
The high cost of LSFO has led some carriers to explore alternative options, such as installing scrubber systems to continue using higher-sulphur fuels or switching to liquefied natural gas (LNG) as a fuel source. Installing a scrubber system on a large container ship can cost around $8 million, but this investment can be recouped in about six months due to the lower cost of high-sulphur fuel oil. On the other hand, some carriers are opting to use LNG to power their ships, as seen with CMA CGM's decision to use LNG for their newly built "megamax" ships.
In addition to exploring alternative fuel sources, carriers are also implementing operational adjustments to reduce fuel consumption and costs. These adjustments include consolidating services through multi-carrier alliances, optimizing routes to serve more locations with fewer ships, and improving hull and propeller conditions to reduce resistance and improve efficiency.
While the cost of LSFO at $600 per tonne may seem high, it's important to note that this is not an isolated expense for carriers. The overall fuel costs for a voyage can be significant, and carriers must carefully consider their options to maintain profitability while complying with regulations and addressing environmental concerns.
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Fuel accounts for 50-60% of total ship operating costs
The cost of fuelling an oil carrier depends on several factors, including the type of ship, its fuel consumption, the fuel type, and the duration of the voyage. For example, a single 28-day round trip for a vessel with a fuel consumption of 217 tons per day and a bunker fuel cost of $552 per ton would result in a fuel bill of $3,353,952. This cost could be higher if the voyage were longer, the vessel were less fuel-efficient, or scheduling delays required increased speed.
Fuel accounts for a significant portion of the total operating costs for ships, ranging from 50% to 60%. This proportion varies depending on the type of ship and service. The high fuel costs for ocean carriers put pressure on maintaining service levels and influence the price of shipping goods. As fuel prices continue to rise, the recovery of these costs from cargo customers becomes challenging. Vessel capacity utilization, uneven trade balances, varying rate handling capabilities, and rising fuel prices all contribute to the complexity of cost recovery.
Fluctuations in fuel prices, particularly bunker fuel oil or diesel, significantly impact ocean freight companies' rate pricing models. Shipping companies closely monitor fuel price shifts and make adjustments to freight rates offered to shippers to protect their profit margins. The direct link between oil prices and bunker fuel costs further underscores the importance of fuel in shipping operations.
To address the impact of fuel prices, shipping companies employ various strategies. These include fuel surcharges that are regularly adjusted based on fuel price changes. Additionally, companies may use hedging strategies to manage the risk associated with price fluctuations, providing a level of predictability in fuel expenses. The age and condition of ships also play a role in fuel efficiency, with newer vessels generally being more fuel-efficient due to design and technological advancements.
In response to the challenges posed by high fuel costs, carriers have implemented operational adjustments. These include consolidating services through multi-carrier alliances and optimising routes to serve more locations with fewer ships. Carriers are also exploring alternative fuels, such as LNG, and investing in scrubbing technologies to reduce emissions and fuel consumption.
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Captains load 50% more fuel than needed to avoid running out
The cost of fuelling an oil carrier depends on several factors, such as the type of fuel, the size of the ship, and the duration of the voyage. For example, the cost of low-sulphur fuel oil (LSFO) is around $600 per tonne, whereas bunker fuel costs $552 per ton. A 28-day round trip for a vessel consuming 217 tons of bunker fuel per day would result in a fuel bill of $3,353,952. This cost could increase if the voyage is longer, the vessel is less fuel-efficient, or if scheduling delays require speeding up. Fuel costs can represent 50-60% of total ship operating costs, a significant expense that carriers aim to manage through operational adjustments.
To avoid running out of fuel, captains may load 50% more fuel than they anticipate needing. This practice is guided by the "Rule of Thirds", a long-standing principle in boating. According to this rule, one-third of the fuel tank's capacity is dedicated to reaching the destination, another third is for the return trip, and the final third serves as a reserve for unforeseen circumstances. This reserve fuel is crucial, as various factors can increase fuel consumption, such as rough weather, sea conditions, currents, wind, or navigation errors.
Captains adopt this conservative approach to fuel management because running out of fuel at sea can be dangerous and even life-threatening. While it may be tempting to slow down to idle speeds when fuel levels are low, this is not always a reliable solution. Instead, captains may need to trim up the boat, keeping the bow up to allow the engine to continue sucking fuel. Additionally, captains should log fuel levels and keep a close eye on fuel gauges, although these can be notoriously unreliable.
To further reduce the chances of running out of fuel, captains can employ alternative strategies. For example, they may opt to conserve battery power for radio communication and engine starting, drop anchor to maintain their position, or call for assistance from professionals or friends. These measures ensure the safety of the crew and the vessel while mitigating the risks associated with low fuel levels.
In addition to the Rule of Thirds, captains can implement other techniques to optimize fuel usage. One method is to utilize a cargo dock and pipe balancer to supplement the oil supply, making the fuel source last longer. Another strategy is to prioritize fuel refining and automate processes to reduce the need for truck deliveries, thereby conserving fuel. Captains may also explore alternative fuel sources, such as vegetable oil, alcohol, or fuel derived from plants and waste treatment. These approaches help extend the fuel supply and reduce the likelihood of running out.
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Frequently asked questions
The cost of fuelling an oil carrier depends on various factors, including the size of the ship, the type of fuel, the route taken, and the price of fuel at the time. For example, the CMA CGM Benjamin Franklin, one of the world's largest container ships, would spend around $3,550,000 on a 14-day journey if it used VLSFO (Very Low Sulphur Fuel Oil). Another estimate for a large cargo ship to fill up its fuel tank is approximately $14 million.
The type of fuel is a significant factor in the overall cost. Due to regulations by the International Maritime Organization (IMO), ships must use fuel with a sulphur content of 0.5% or lower, which has increased costs for shipowners. As a result, some ships have opted for lower-grade oil, while others have invested in scrubbing technology to reduce sulphur emissions.
Fuel costs can account for up to 60% of a ship's total operating costs, making it the single biggest expense. This high percentage is due to the large amounts of fuel required for long journeys and the high prices of fuel per ton.
Oil carriers employ various strategies to reduce fuel consumption and costs. These include consolidating services through multi-carrier alliances, optimizing routes to take advantage of favourable winds or tides, and improving hull and propeller conditions to enhance efficiency. Additionally, some carriers opt for lower-grade fuel or utilize scrubbing technology to comply with sulphur emission regulations.
