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Rising freight rates driving Mexico’s fuel bills higher
INCREASING worldwide freight costs are driv- ing Mexico’s fuel costs upward as the country looks to satisfy high domestic demand.
The higher rates have imposed additional strains on public finances. Mexico’s fuel bills were always bound to be high, as the country is currently the largest fuel importer in Latin America, as well as the fourth-biggest buyer worldwide, and the rising freight costs have exacerbated the upswing. However, market conditions have become even more volatile due to the reshuffling of global oil flows in the wake of Russia’s invasion of Ukraine.
This reshuffling has, for good measure, led to increases in the cost of marine fuel, as well as other types of petroleum products. As a result, transportation costs for fuel shipments, which are often moved by tanker, have risen.
As Reuters noted last week, rates for tankers importing US-made refined fuels to Pajaritos, Mexico’s main import terminal for petroleum products, hit $39.16 per tonne in August. Between 2017 and the first quarter of 2022, by contrast, this rate never exceeded $18 per tonne.
Mexican fuel importers have few options for cutting their costs, partly because they do not have access to port facilities that can handle larger vessels with greater economies of scale, Bloomberg noted.
“We are paying $50,000 per day for tankers coming from the US Gulf Coast [USGC],” one Mexico-based shipper explained to the newss agency. “Mexico’s ports do not accommodate larger tankers, which would cut costs, storage is limited, and we compete with Pemex’s lump- sum contracts.”
Despite these limitations, fuel importers are working to meet increased demand in Mexico.
As a result, the volume of US fuel deliveries to Mexico have risen from 1.12mn barrels per day (bpd) as of the start of 2022 to 1.2mn bpd as of May 2022. Traders would like to boost ship- ments even more, but insufficient pipeline and storage capacity has prevented this – and has also caused congestion in transport networks that leads the national oil company (NOC) Pemex to incur even higher freight tariffs.
Mexican President Andres Manuel Lopez Obrador has acknowledged this problem, and in an effort to increase storage and prevent fur- ther port bottlenecks, he has backed the con- struction of the massive new Olmeca refinery in a bid to increase domestic fuel production and reduce imports. However, the project has run far behind schedule and over budget, and Mexico remains reliant on fuel imports. As of August 3, Bloomberg noted, more than 40 tankers had been waiting to discharge their oil and fuel car- goes in Mexico for more than a week.
The waiting period for discharge at Mexico’s Pacific coast ports is longer due to greater infra- structure limitations. This has caused significant backups for imports from China, Singapore and the United Arab Emirates. ™
Port congestion has exacerbated the problem (Photo: Puerto Coatazcoalcos)
PANAMA
Panama Canal Authority says LNG tanker transits fell by 30% in last nine months
Ilya Espino de Marotta, the deputy administra- tor of the Panama Canal Authority (PCA), said last week that the number of LNG tankers pass- ing through the Panama Canal had dropped by
nearly a third over the last nine months.
In an interview with Reuters, Espino de Marotta said LNG tanker transits through the
canal had fallen 30% in the last three quarters.
P6 w w w . N E W S B A S E . c o m Week 32 10•August•2022