Global energy and commodity price reporting agency Argus is launching today freight rates for biofuels and biofuels feedstocks in response to growing demand for price transparency in the energy transition fuel supply chain.
Regulatory incentives for the use of low and zero-carbon fuels have driven increased trade of these commodities. Shifting trade flows, vessel shortages and bottlenecks leading to tanker market volatility mean that biofuels market participants require additional transparency to manage freight exposure.
The 60 new Argus weekly assessed “specialised” rates cover biofuels and biofuels feedstocks. These include biodiesel, hydrogenated vegetable oil (HVO), ethanol, sustainable aviation fuel (SAF), palm oil, vegetable oils, used cooking oil, tallow and palm oil mill effluent (Pome). The assessments cover loadings from Asia to Europe on 22,000dwt stainless steel vessels and 50,000dwt IMO 2 type coated tankers, and coasters at European ports.
The new assessments reflect the specialised transportation required to move these cargoes. The relatively smaller parcel size, cargo hold type and heating requirements often make freight costs higher for these commodities compared with conventional refined products cargoes.
For example, at around $41/t, the rate to transport biodiesel across the Mediterranean is more than double the rate to move conventional diesel on the route in today’s market.
Argus chairman and chief executive Adrian Binks said: “Argus is pleased to provide new transparency to biofuels freight rates around the world as companies embrace energy transition fuels into their supply chains. Shipping costs are a vital component of landed prices for biodiesel, SAF, vegetable oils, UCO and other low-carbon commodities. By working with the biofuels and shipping industries, we have created a robust pricing methodology that allows market participants to track and manage their freight exposure.”
The new biofuels and biofuels feedstock freight rates build on Argus’ existing global conventional tanker market coverage and complement Argus’ global biofuels market coverage.
