COMPLICATIONS OF FREIGHT RATE COMPARISONS

The robust multipurpose ship freight rates of the past 18 months have left engineering, procurement and construction companies in a predicament. With contracts confirmed 12-24 months before project execution, predicated on time charter rates that were in some cases 50 percent cheaper than the spiking rates of the first half of

AT BREAKBULK EUROPE…

Examining the MPV Fleet

Wednesday 07 June 11:00 - 11:20

Regions: Global

Problem: Robust multipurpose rates prompt calls for a fairer mechanism to spread the risk and reward of seaborne freight costs

Solution: Industry needs to come together to work on transparency and auditability

2022, EPCs are finding that their transportation books just don’t balance in today’s market.

While freight rates have come off their peak, they are still at a comparatively high level. Projects still need to go ahead and transportation needs to be found, regardless of increased rates, so EPCs need to find a way forward.

By Carly Fields

For Cyril Varghese, global logistics director at Fluor, everything boils down to fairness: “One of the most important discussions we are having with our clients is regarding fair and balanced contracts.” He sees it as ‘fair’ to work in an environment where no stakeholder within the supply chain is disadvantaged. That fairness includes working to market rates; however, that’s easier said than done because EPCs have become used to receiving fixed and firm prices for an agreed upon duration. “Those fixed and frozen rates allow us to be able to plan and budget properly.”

The biggest question that Varghese hears from clients in today’s market is ‘how do you bring transparency and auditability?’ “We need to have