Results generated by Norden’s operated fleet of bulk carriers have led to the Danish firm booking its best annual result in 11 years. The Copenhagen-listed firm recorded annual profit of $205m for the full year 2021, which was also the year of its 150th anniversary. Return on equity in 2021 was 22%. The company, which owns and operates product tankers and small to midsize bulkers, booked $86m in profit for the full year 2020. Chief executive Jan Rindbo said the 2021 result was generated by “active trading, record-high activity levels and good execution in a strong dry cargo market. Norden continues to deliver profitable growth, and we are pleased to share this great result with Norden’s shareholders with a proposed dividend of DKK 18 per share [$2.68].”

He said the company expects even higher annual profit for 2022, which could fall between $210m and $280m. Norden has been busy expanding its range of services. Earlier this month, it revealed that it is growing its port logistics business by operating a transshipment facility for manganese mining company Comilog in Gabon. It has also expanded its parceling services. During the fourth quarter, Norden booked $123m in profit, up from just $3m in the final three months of 2020. Most of this quarterly result was generated by Norden’s operated fleet of bulk carriers. The dry operator business unit made $128m in profit during the final quarter, up from $27m in the same period of 2020. Norden said the “outstanding result” was generated by capitalizing on tonnage it took on charter at lower rates during the first half of 2021, “combined with good execution across regions and vessel types”.

Earnings for product tankers, however, continued to be poor and Norden’s tanker operator unit recorded an $8m loss during the fourth quarter. Its asset management unit, which handles its owned vessels, made a $3m profit. This is up from a $13m loss during the fourth quarter of 2020. Norden said it was able to seize on higher bulker values and sold four dry-cargo vessels during the period. It also replaced two older tankers with two MR product tankers acquired in the second-hand market. Anders Redigh Karlsen, head of shipping at financial services firm Kepler Cheuvreux, said Norden’s upsized profit guidance for 2022 came in “well above” his firm’s expectations. Kepler Cheuvreux had previously expected Norden to book around $113m in profit for 2022, which is $3m more than the consensus estimate. Karlsen said he expects to see a “clear positive” reaction in Norden’s share price, following the new guidance.

He also pointed to the mixture of positive and negative factors that conflict in Ukraine could have for Norden’s business. “The situation in Ukraine will lead to volatile markets ahead both for dry cargo and product tankers. In our view, we could see a potential near-term negative effect from the loss of exports of grain in the dry cargo space,” he said in a note on Thursday. “For the product tankers, we foresee demand from the current situation leading to a positive shift in rates.”

Covid-19 is spreading rapidly in Hong Kong, a potential forewarning of what may come in China. With less-efficient vaccines and an ambition to move away from its ‘dynamic zero’ Covid-19 policy, continued containment and economic growth are likely to be weighed against one another. The impact on shipping is still unclear, but widespread lockdowns in China would be negative for most shipping segments, in our view. If the pandemic-related measures are eased, we see a likelihood of less congestion and more dry bulk demand.

Covid-19 cases surging despite 70% vaccination rate in Hong Kong. The number of Covid-19 cases in Hong Kong is surging, with 32,527 new cases and 117 deaths reported on Tuesday (of c800 total assumed deaths during the entire pandemic). The high vaccination rates have failed to contain the spread of the virus, most likely because 40% of the administered vaccines have been the less efficient Sinovac version. We believe a lockdown may be introduced, as Hong Kong appears to be considering its most severe measures since the pandemic’s start.

A ‘stress test’ for China’s potential move away from ‘zero Covid-19’ policy. China has opted to use domestically developed vaccines that have lower efficacy against the recent variants. In addition, only 50% of the 36m people above the age of 80 have been vaccinated, with the reported fatality rate at 21.5% for unvaccinated persons. Hence, Chinese officials appear to be closely monitoring the situation in Hong Kong as a ‘stress test’ of how to cope with the spread of the virus, as they consider a possible change from the ‘dynamic zero’ Covid-19 policy, although we believe a large-scale shift is unlikely before next year.

If virus spreads in China, lockdowns or not? To the best of our knowledge, the soaring numbers in Hong Kong could be an early sign of what is to come in China. If so, the question is how China will deal with the situation. Following the Olympics and given the possibility of a stagnating global economy, we believe Chinese growth should be in focus. However, the country’s strict management of the pandemic is also likely to be a core focus going forward. In light of the low vaccine efficacy in the country, lockdowns could be the only viable solution.

Either positive or negative for dry bulk. On the one hand, if strict lockdowns affect Chinese growth, we believe dry bulk should take a hit. On the other hand, stimulus and growth could be highly advantageous for dry bulk demand, especially if designed to counteract negative international impulses.

Lockdowns would likely restrict oil demand and take pressure off containers. We believe lockdowns would affect oil import demand. A pause in Chinese production could also alleviate supply chain pressures in the container industry and allow the vaccinated western world to regroup.

Inefficiencies in shipping to China could subside. We also note the likely impact on inefficiencies for shipping related to China’s pandemic-related controls, which should be reversed if the ‘zero Covid-19’ policy is abandoned. In our view, this would primarily affect containers and dry bulk, thereby freeing up capacity in the market.

Long construction lead times for containership orders placed at the start of the newbuilding boom in 2020 should ensure the benefits, or otherwise, of this additional capacity will not be felt until next year. According to Alphaliner, there will be insufficient new boxships coming into service this year to compensate for the capacity shortfalls caused by system inefficiencies it said were presently consuming about 10% of  ‘dynamic’ containership capacity. “Since the uptick in orders only came in mid-2020, when the orderbook-to-fleet ratio was only 9%, newbuilding deliveries this year are forecast at ‘only’ around 1.10m teu. This is roughly in line with the average in 2016-2021 when annual boxship deliveries oscillated around the 1m teu mark,” said Alphaliner. But while the lion’s share of boxships contracted in the recent boom of post-2020 will not enter service until 2023 and 2024, both years will see historic record deliveries of around 2.4m teu, or around 9% of fleet growth per year.

“Carriers and non-operating owners made 2021 a bumper year for container vessel orders and contracting activity continued through the first two months of 2022,” said the analyst. As of February, the global orderbook-to-fleet ratio stood at about 25%, which is considerably less than the 65% seen in the previous ordering boom of between 2006 and 2008. However, present numbers relate to a baseline fleet that has more than doubled in size since 2008. Meanwhile, there is some evidence to suggest that shipyards are bringing forward delivery schedules of existing orders. “Incentivized by strong demand, a number of yards have accelerated ship deliveries wherever possible. In many cases, this allowed the builders to negotiate premiums with owners who may benefit from an early delivery,” said Alphaliner. “At the same time, accelerating the pipeline has allowed yards to market additional newbuilding slots that have opened up. A slowdown in demand could similarly push owners to defer some tonnage delivery until 2025.”

Escalating newbuilding costs, which have risen 20% in the past two years, are so far yet to put off buyers. Declines in the value of the Chinese Yuan and Korean Won against the US dollar helped to incentivize owners to place orders last year, while container line operators’ recent enormous profit margins have convinced them to modernize their fleets, with more efficient ships equipped with higher specifications than would have been ordered in the past. More than half of all capacity on order is provided by neo-panamax units of 12,000 teu-16,000 teu capacity under construction for both container line operators and non-operating owned tonnage provided by the likes of Eastern Pacific Shipping, Shoei Kisen and others. Neo-panamax has become the go-to class of vessel for mainline container carriers, according to Alphaliner. It points out that every single top-12 carrier currently has ships of this class on order, either through outright ownership, charter, or both. At 3.47m teu, neo-panamax ships account for 55.7% of the global 6.22m teu orderbook. Ships of this size are no longer limited to the east-west mainlines but have found their way into numerous second-tier services to India, West Africa, and the east and west coasts of South America. Many of these ships are expected to take the place of ageing 8,000 teu class units built in the early 2000s that will phase out of service at about 20 years of age once the market has “normalized” said Alphaliner.

Meanwhile, interest in trade-flexible ships of 5,500 teu-7,000 teu appears to be on the increase, with ordering of this size range starting to take off last year. Consequently, deliveries of mid-sized ships will remain low in 2022 and the first half of 2023. Most recent containerships orders placed so far this year have been of this vessel type. Interestingly, orders for so-called megamax boxships have taken a downturn, with no orders for ships with more than 18,000 teu capacity having been placed this year. “Only a limited number of megamax ships will join the global container line fleet in 2022, with the only carriers to receive this kind of tonnage being Evergreen and MSC,” said Alphaliner. “In 2023, however, the picture becomes more colorful with ONE, Hapag-Lloyd, and OOCL among the recipients of megamaxes.” Container line operators receiving megamax units in 2024 include Hapag-Lloyd and OOCL, while deliveries will dry up due to the lack of recent ordering of this vessel class. However, Cosco is understood to be in the market for a further series of 24,000 teu units, which would then replenish the megamax pipeline well into 2025.

Minimal containership fleet growth could be helpful this year, given that economic growth forecasts for 2022 are being revised downwards due to inflation concerns, China’s overheated real estate sector and the Ukraine crisis. The United Nations Conference on Trade and Development has said it is likely that global trade trends will reflect macroeconomic trends, “with lower-than-expected trade growth — efforts to shorten supply chains and to diversify suppliers could affect global trade patterns” this year.

The dry bulk market has returned to a positive state of play following the negative impact of Russia’s military incursion into Ukraine. Spot rates and forward freight agreements have edged up as supply-demand fundamentals are back in focus.“The dry forward freight agreements reacted strongly and negatively [along with most markets] to the Russian invasion of Ukraine,” said Freight Investor Services head of business development Kerry Deal. Capesize forward freight agreements were particularly hit, dropping 17% to $21,750 for the April contract in the first two days after the invasion, while panamaxes held ground better, shedding 11% to $24,740. However, both have regained most of the lost ground, rising by $4,000 and $2,000, respectively, on March 1 trading. There is “a general feeling that the market collapse had been overdone, and tonnage demand remained healthy on the larger sizes across both minerals and grains away from the Black Sea region,” he said, though “huge uncertainty” remained.

US-based Breakwave Advisors said that as risk appetite was reduced, forward premiums in the futures market had shrunk. Although the smaller size vessels continued to find support because of an already stretched global supply chain, the larger vessels lacked cargo flow momentum. However, it expects “seasonal forces will once again become increasingly relevant” and it expect some gradual improvement in demand for iron ore transportation out of Brazil, beneficial for the capesize segment. “Such a pickup, combined with the relative strength in panamax and supramax spot rates, should also push spot rates for capesizes higher,” it said in a note. “Fundamentally, the dry bulk market looks reasonably strong, but global geopolitical risk has now increased, affecting several areas of the global economy with unknown outcomes or relevant timeframes.”

Signal Ocean, a Greece-based analytics platform, said that demand evolution shows “significantly higher growth this week” for the panamaxes, followed by worries about disruptions on Russian coal deliveries. The trend is also higher for supramaxes given that Ukrainian grain ports were now closed, and buyers were seeking alternatives, it said. More than a dozen bulkers have been stuck at Ukrainian ports since February 22, mostly in the panamax size category and below, according to Lloyd’s List Intelligence data. Star Bulk confirmed it has three vessels which have completed loading and which are waiting for ports to re-open so that they can set sail. Crews onboard remain well, and the safety of seafarers is the top priority. The company does not have any vessels in Russia, and it has “no imminent business under consideration”. All its vessels are covered by war risk insurance.

Capesizes rose 14% to $15,258 per day at the close on the Baltic Exchange on March 2, while panamaxes gained 1.3% to $23,703.  Supramaxes were at $27,178, a gain of 1.7%, while handysizes were at $25,577, an increase of 1.1% to the highest since end-December.

The Russia sanctions risk is expected to change day by day as the west seeks new ways to punish the country for its war in Ukraine. With the UK barring Russia-connected ships and the European Union considering similar action, companies are trying to establish where it is safe and legal to trade, and with whom, a BIMCO webinar was told. The UK Department for Transport asked British ports not to give access to any ship owned, chartered, or operated by any person connected with Russia. Crowell & Moring partner Michelle Linderman said existing UK sanctions regulations could give a hint of to whom the phrase “connected with Russia” applied. She said these covered entities either incorporated, constituted, or domiciled in Russia, which was “very, very broad”.

Ships owned, controlled, chartered, or managed by Russian entities could be prevented from coming into UK ports. “People will have exposure to this,” she said, urging operators to use BIMCO’s sanctions clauses when drawing up charterparties. “The UK might seem fairly limited at the moment, but we do know the EU is looking to do exactly the same thing.” David ‘DJ’ Wolff, a partner at the law firm, called it the “most comprehensive coordinated global sanctions campaign we have ever seen”, adding that restrictions could be divided into those covering people, places, and activities. Places were the easiest: there was a blanket embargo on separatist-held regions of Donetsk and Luhansk, but since products could not be sent there anyway, this was not much of a problem. The prohibited persons category was harder since it covered who operators could pay or be paid by. “Screen your banks, screen the banks of any of your counterparties,” Mr Wolff said.  The US had sanctioned Sberbank, Russia’s largest bank, and other banks had been targeted with more limited credit restrictions. If banks were cut off from Swift, the platform banks use to communicate, it would be nearly impossible to transact with them. There were questions about whether sanctions on the Russian Central Bank could affect tax payments made to it.

Sanctions on Russian oligarchs, meanwhile, were difficult because of their webs of business links. “Oligarchs own a lot of stuff,” Mr Wolff said. “And because sanctions flow down to everything they own — or in the EU or UK case, control — then you’re prohibited to not only transact with the individual, but their network.” The US had not sanctioned the activity of shipping to Russia yet, as it had with Iran. But ships should be aware of export controls, which were increasingly put on certain electronic and artificial intelligence goods. There were no restrictions on importing Russian oil and gas, but this could change, he said. Ms Linderman said banks were pausing their Russian activities and refusing to open letters of credit while they got to grips with the sanctions. Some were worried about compliance, others reputational risk of seen to be supporting Russia’s war. Companies could fall foul of sanctions if they paid a Russian crew member through a sanctioned bank. She said operators should check with their P&I and legal advisers before refusing to call at a Russian port. Companies should try to negotiate a middle ground to avoid costly contractual disputes: “There’s enough conflict going on.”

Governments seeking to block vessels owned or controlled by Russian interests from entering ports will have to track a global list of 6,448 vessels, according to Lloyd’s List Intelligence data. That list includes all vessels either flagged, owned, or operated by entities based in Russia, including those beneficially owned rather than simply registered behind brass plate companies for tax purposes. While the total fleet of vessels with Russian beneficial ownership links is vast, international scrutiny is likely to focus on the much smaller priority list of 429 internationally trading vessels over 10,000 dwt. Nearly 20% of these vessels are crude oil tankers. Bulk carriers and product tankers account for 16% and 12%, respectively.

Britain has banned Russian owned, operated, controlled, chartered, registered, or flagged ships from entering UK ports and issued legislative backing to the order, prompting at least 20 Russian vessels to immediately deviate or anchor awaiting orders. The UK Department for Transport has today confirmed that while the Secretary of State retains the right to make exception, Russian cargoes will not be targeted by the ban, effectively allowing non-Russian affiliated vessels to load in Russian ports and discharge in the UK. The UK ban, which entered into force at 1500 hrs GMT on March 1, was swiftly followed by the European Parliament adopting a resolution on Tuesday calling for European Union ports to similarly block Russian vessels from entering. Crucially, this call went further to specify that the ban should include “ships whose last or next port of call is in the Russian Federation, except in the case of necessary justified humanitarian reasons”. While the resolution is not legally binding in its current format, the Parliament will now pressure EU member states, which can take such decisions by qualified majority, under the same procedure as the economic sanctions. Lloyd’s List understands that several key EU member states are pushing hard for the sanctions to be adopted urgently.

Canada has also implemented a ban on Russian vessels entering ports. According to Lloyd’s List Intelligence vessel tracking data, around 256 ships with Russian ownership links are currently scheduled to arrive in EU ports by April 7. Approximately 200 vessels are currently scheduled to head to Russia, having called at either a UK or EU port. However, rapid voyage diversions have become standard practice over the past week. In 2021 UK and EU ports collectively received an average monthly volume of 829 Russian-affiliated vessels. As of Wednesday morning, only nine Russian-owned or controlled vessels were still signaling UK as their destination and only one Russia-flagged vessel, the chemical tanker Tecoil Polaris (IMO: 8883290), remained in the port of Hull. At least a dozen Russian-controlled vessels had been anchored off the UK coast in the immediate aftermath of the ban taking effect, but by Wednesday afternoon all have diverted, largely to European ports. In 2021, 149 ports in the UK received Russian-affiliated vessels, with Immingham the most popular destination for Russian-owned traffic and the most common types of vessels being small general cargo ships.

The UK Department for Transport is understood to be in the process of drawing up a blacklist of all vessels to be denied entry into UK ports that will quickly be distributed to harbor masters and port officials. The UK legislation published on Tuesday allows the Secretary of State “to control the movement of Russian ships, or specified ships, by requiring them to leave or enter specified ports, proceed to a specified place or remain where they are”.  It also includes powers to detain Russian vessels and to direct them out of British ports, although the DfT has stated that these powers would be applied on a case-by-case basis where needed, and in close discussion with the port. Lloyd’s List understands that the UK ban has sparked a series of urgent calls from UK ports seeking clarification over the orders. The UK National Grid has already challenged the DfT over whether the ban applies to shipments of liquefied natural gas. The decision over LNG imports may require sign-off from the Business, Energy, and Industrial Strategy (BEIS) department and the National Grid has raised concerns that it has legal and contractual obligations to receive vessels and does not have any control over the origin of the LNG they contain. The UK received 3.91m cu m of LNG from Russia between February and December last year, about 17% of the nation’s entire imports of the supercooled fuel for the period, according to data from Lloyd’s List Intelligence’s LNG trade report.

Russian-affiliated LNG has already started diverting away from the UK. The Christophe De Margerie (IMO: 9737187), owned by sanctioned Russian operator Sovcomflot, had been scheduled to arrive at the Isle of Grain terminal from Russia on March 4 but Lloyd’s List Intelligence showed its destination changed to France immediately after the UK ban was announced by Transport Secretary Grant Shapps on the social media platform Twitter. Russia supplied the UK with approximately 3.61 MMT of crude oil in 2021. This accounts only for 1.4% of total Russian oil exports, as per data from Lloyd’s List Intelligence APEX. The rapid introduction of the ban has left industry officials, individual companies and several senior government officials struggling to keep up with the commercial implications of changes being announced. “The impact of vessels not being allowed into UK ports is that owners and cargo interests are struggling to work out what to do with their vessels and cargoes. Payment is becoming difficult and is likely only to get worse as matters progress. Credit terms need to be considered carefully,” warned Sally-Ann Underhill, shipping partner at global law firm Reed Smith. “But the issues go much further. War risk clauses, safe port provisions and force majeure / exceptions clauses are all coming under scrutiny. Owners with Russian crew on board are considering what steps they need to take and what difficulties they may face at certain ports. And those with Ukrainian crew on board are facing issues when their crews ask to be repatriated. “Redelivery is also becoming an issue again as rates rise and charterers decide to keep vessels even when notices of redelivery have been tendered.”

Meanwhile, the exodus of shipping businesses rapidly extricating themselves from Russian-affiliated business continued apace on Wednesday. Bunker Holdings, the marine fuel supplier convicted of breaching Syria sanctions last year, has completely pulled out of Russia. “Bunker Holding and its affiliates have suspended all trade with Russian counterparties. This goes for any Russian company, state operated as well as privately owned, along with companies with links, ties, or affiliation to a Russian ownership,” a statement issued to Lloyd’s List explained. Commodities trader Trafigura, meanwhile, has frozen investments in Russia and is “reviewing the options in respect of our passive shareholding in Vostok Oil in which we have no operational or managerial input”.

Australian east coast is hit by a severe weather driven flood, moving from Queensland down to New South Wales.

Last time Australia was hit by a “once in a century” flooding was in 2011. Back then, the flooding damaged coal infrastructure such as mines and rails, with negative impacts on coal supply lasting for many months, whereby 75% of the coal miners had to halt exports and export as the mines were taken out of operation.

We have not seen any news yet pointing at impacts on Australian coal supply. However, yesterday the futures market spiked to new all-time highs, and we suspect the flooding was an important price driver.

Australia exports account for ~17% of total dry bulk ton-mile demand, of which, one third is related to coal exports.

Should the flood have a similar effect as seen in 2011, we expect it to have a negative impact on the dry-bulk market, as full replenishment of the volumes seems difficult to achieve and Indonesia, which might offset some of the lost volumes, has a lower sailing leg into China.

The Ukraine crisis has led to shipowners proving reluctant to continue with scrap sales of larger vessels as ship recyclers focus on smaller units, brokers and cash buyers say. A limited number of sales have been reported in the last week. “The last few days of the month have been completely thrown out of synch following the announcement of the Russian invasion of Ukraine,” said demolition broker Ed McIlvaney. “Certain tonnage which was placed to the market for sale has been withdrawn or [is] temporizing pending clarification and/or a resolution to the conflict,” he added. McIlvaney explained that several large bulk carriers were being discussed, but no deals have been concluded, although sales are likely to be revisited in time. The broker said cash buyers have been given permission in some instances to keep trading ships prior to recycling.

Cash buyer Best Oasis said volatility being experienced throughout the world is clearly reflected in the prices of “everything under the sun. During such unprecedented times it becomes difficult to make substantial buying decisions due to the fear of unforeseen changes, which is why most of the recyclers are looking for mid-sized tonnages and refraining from investment in large-sized tonnages, despite the robust steel market,” the company added. But Best Oasis said the Indian sub-continent ship recycling market is performing remarkably well, with stable demand and supply across the major recycling destinations. “Global dynamics will certainly re-align, impacting commodity flows as Russia is the world’s third-largest steel exporter after China and Japan, while combined, Russia and Ukraine control almost 10% of the total seaborne steel trade,” the company concluded.

The biggest cash buyer, Global Marketing Systems (GMS), said Bangladeshi scrappers have ramped up their buying and price offerings, mindful of the fact that sanctions could starve them of a supply line of ships for a short time. “Steel scrap prices have improved significantly in Bangladesh and India this week, leaving both markets positively poised going into March, whilst Pakistan slows down and waits to watch the international situation and subsequent market developments,” GMS added. The company said sanctions against state-owned Russian vessels will prevent them from heading for recycling yards. “As it stands, despite the ongoing international turmoil, recycling markets keep giving owners a viable end of life option at fantastic decade-high levels, while freight rates continue to perform admirably at present,” GMS added. McIlvaney reported the 106,000-dwt aframax Mikines (built 2003), operated by Germany’s Chemikalien Seetransport, as sold on private terms. The tanker has arrived in Primorsk, Russia, which could be a potential risk for the buyers, he believes. India owner Seven Islands Shipping’s 34,000-dwt handysize tanker Harmony (built 1999) was also said to have been sold at $650 per ldt in Colombo, Sri Lanka. The strong price includes 200 tonnes of fuel oil and 40 tonnes of gasoil. The ship is likely destined for Bangladesh.

Bunker prices have continued to soar to new record highs, prompting resistance to low rates among tanker owners. Marine Bunker Exchange (Mabux) is citing very low-sulphur fuel oil (VLSFO) up nearly 10% in a day at $795 per tonne on average around the world. High sulphur bunkers are down 2.65% at $616 per tonne, which is good news for owners of vessels with scrubbers as the price spread to VLSFO widens, while marine gasoil is unchanged at $909.50.

The averages hide big regional variations, with South American suppliers selling VLSFO at $850, while ships in Asia can pay $754 and just $728 in northern Europe. The price of ship fuel has been one of the factors behind a recent rise in tanker rates from all-time lows, as owners demanded better numbers from charterers, emboldened by disruption and uncertainty arising from Russia’s war in Ukraine, brokers and analysts have said. Mabux said geopolitical tensions and global market instability could send bunker prices even higher, with rises of up to $15 per tonne tipped for VLSFO in the coming days. The rises are being propelled by higher crude oil prices. Brent hit $113 per barrel on Wednesday, up $8, the highest level since 2014. WTI crude futures earlier closed above $100 per barrel for the first time in seven years. The gains came despite the International Energy Agency announcing on 1 March that it would organize a release of 60m barrels of oil from strategic reserves. This will prove “there will be no shortfall of supplies as a result of Russia’s invasion of Ukraine”, the agency said.

As the spread widens between low and high sulphur fuel, Clarksons Platou Securities has estimated a premium of $10,300 per day for VLCCs fitted with scrubbers. VLSFO in South America was at record highs, with high sulphur fuel and gasoil at levels not seen since 2013. Low sulphur bunkers jumped $43 in a day on 1 March to $816 per tonne in Balbao, Panama. “Some people are holding [fuel purchases] until tomorrow, which in my opinion is a bad idea. Market is poised to continue rising, plus it is very tight in avails for high sulphur fuel oil and VLSFO,” a market source at the port told the Platts news agency. Supplies of high sulphur fuel are expected to be constrained because Russian M100 oil will not be able to reach the US Gulf coast for now, the source added. In Callao, Peru’s main port, marine gasoil spiked $70 in a day to $1,150.

The International Transport Workers’ Federation (ITF) and the employers’ representative Joint Negotiating Group (JNG) have come to an agreement on pay and conditions for seafarers working in the war hit seas around Ukraine. Under the agreement in the northern Black Sea and Sea of Azov have been designated a War Like Operations Area. Seafarers who work under the International Bargaining Forum (IBF) collective bargaining agreement will be entitled to benefits when working in the region. The benefits include a bonus equal to basic pay and payable for a minimum of five days, the right to refuse to sail — with repatriation and compensation at the company’s cost — and double compensation for death and disability. “The escalation in hostilities and conflict in Ukraine has put enormous pressure on seafarers of all nations and an industry already laboring under the demands and challenges of the pandemic,” the JNG and ITF said in a joint statement. “The parties agreed that the welfare of seafarers and the protection of their rights in this unprecedented situation was paramount to the spirit and intent of the IBF agreement.” IBF agreements cover around 9,000 ships.

The move comes following several attacks on shipping following Russia’s invasion of the Ukraine. Further discussions between the ITF and JNG are understood to be taking place on protocols to ensure the safety of seafarers in the region. There are also discussions on providing refugee arrangements for Ukrainian seafarers and their families. Russia and the Ukraine are both major labor supply countries to the shipping industry, with many seafarers from both countries working under IBF agreements. The ITF, which has affiliate seafarer unions in both the Ukraine and Russia, has been calling for an end to the war, and the Russian withdrawal from Ukraine. In a statement, made together with the European Transport Workers’ Federation, the ITF said: “We stand alongside the global labor movement and the international community in condemning the war, and call on all parties to adhere strictly to international and human rights law. This conflict must stop now.”