The separation of fuel and freight describes one of the positive contracting amendments to come from IMO2020. Despite a past common practice of using all-in rates, carriers and shippers have generally separated fuel and freight costs in contracts during 2019.

Much of the shift form all-in rates was initiated by carriers to improve their chances of recovering IMO2020-related fuel costs. Shippers may have found this an unwelcome change from conventions, but developing separate budgets for fuel and freight costs is imperative to procure freight competitively. This approach provides much-needed transparency between fuel and freight costs, simplifies quantification of fuel exposure to understand risk, and realises the full impact of fuel efficiency enhancements.

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