Shippers hunt for alternative bunkering ports amid Red Sea disruptions

Shippers and exporters are opting for alternative ocean transportation routes as the Red Sea situation remains volatile with ports in East/West Africa, and the Arabian Gulf likely to benefit as a rising number of ships fuel there instead, industry sources said.

Some 35,000 ships that sail through the Red Sea annually could be impacted as escalated attacks on merchant ships continue in the region, according to the industry sources.

Under an extended threat, ship and freight forwarders face disruption and increased freight costs because moving goods around Africa can add as much as 30 days to a voyage, global bunker company Glander International Bunkering said in a statement Jan. 12.

"As a result, we are seeing an increase in bunker demand in East/West Africa and the Arabian Gulf. This is primarily in Durban, Port Louis, Canary Islands, Salalah, and Fujairah," it said.

Effects include longer lead times as barge schedules are booked up and cargo/supplier availabilities become tighter, it said, adding that this translated to higher premiums which could disrupt bunker plans.

Any normalization of vessels transiting the Red Sea to pre-December levels is unlikely any time soon and the markets will stay on tenterhooks awaiting further clarity in coming days, said Rahul Kapoor, Vice President, Head of Shipping Analytics Research at S&P Global Commodity Insights.

"We certainly expect to see more fuel oil heading to South Africa as more container vessels take bunker fuel," Kapoor said.

"South African hubs and mostly Durban have been covering the additional demand so far, with west Africa, including the Canary Islands, expected to contribute as well," he added.

Meanwhile, two shipping sources in Southeast Asia expressed similar sentiment.

"South Africa will need a lot of oil. They might not be fully prepared for the drastic surge in bunker fuel demand," one of the shipping sources said late Jan. 12.

Another source said that it was gauging the bunker fuel prices at Durban to make fueling decisions. According to the source, bunker fuel prices at South African ports could ratchet in the coming days as an increasing number of ships reroute through the Cape of Good Hope.

Platts assessed marine fuel 0.5% bunker delivered Durban at $700/mt Jan. 12, up $5/mt day on day, showed S&P Global data. Bunker fuel oil 180 CST delivered Durban was assessed at $595/mt Jan. 12, also up $5/mt on the day.