Spillover transmission and return connectedness in the post-IMO 2020 ERA global VLSFO bunker market: Evidence from the Diebold–Yılmaz framework

Abstract

This study examined return connectedness and spillover transmission among ten major VLSFO bunker hubs in the post-IMO 2020 era. Using daily log return data from 12 June 2023 to 12 June 2026 and the Diebold–Yılmaz connectedness framework, the study identified the system-wide, directional, net, and pairwise spillovers across key VLSFO bunkering hubs. The baseline results show a Total Connectedness Index of 72.56%, indicating a highly integrated global VLSFO bunker market, and a substantial share of return variation is explained by inter-market spillovers. Singapore emerges as the dominant net transmitter, while Hong Kong, Fujairah, Rotterdam, and Houston also act as important transmission hubs. Santos appears as the largest net receiver, suggesting stronger exposure to shocks originating from other hubs. Pairwise and network results show that the Singapore–Hong Kong–Fujairah axis forms the core of global VLSFO spillover transmission, while the Houston–New York connection and Rotterdam-linked routes represent important regional spillover channels. A complementary 200-day rolling-window analysis further shows that total connectedness varies over time, ranging from 52.75% to 88.80%, indicating that the VLSFO spillover structure is dynamic rather than fixed. These findings provide useful implications for bunker procurement, fuel cost management, and maritime energy risk monitoring by identifying the main transmission hubs and receiver markets in the global VLSFO network.