From 1st January 2020, a new regulation will come into force to reduce air pollution from ships globally. Earlier this month, Maersk Line said it would change fuel adjustment surcharge to recover presumed costs from the introduction of low-sulphur marine fuel from January 1, 2020. Whereas today ships can use fuel with up to 3.5% sulphur content (outside Emission Control Areas), the new global sulphur cap will be 0.5%. Carrier profits to surpass H1 2020, but 2021 outlook uncertain: analysts UK shippers forced to soaring spot market amid port chaos Shippers brace for wave of carrier charges as service suffers As explained, the new Bunker Adjustment Factor (BAF) surcharge aims at recovering Maersk Line’s costs of compliance with the global sulphur cap, which mandates the use of fuel with a sulphur content of 0.5% instead of 3.5 %. Low Sulphur IMO 2020 Regulation For short-term contracts - not subject to floating BAF - … Low sulphur fuel is the best way for the shipping industry to meet the International Maritime Organization’s (IMO) sulphur cap, set to enter into force in 2020, CEO of industry major A.P.Moller Maersk, Soren Skou, said at Singapore Maritime Week 2018. Maersk Jacks Up Fuel Surcharge as Shipping’s Biggest Expense Spirals By . Maersk’s surcharges for 2020 (Source: Maersk) The ocean carriers have started introducing the surcharges well ahead of … Maersk has previously estimated a $2bn rise in its annual fuel costs due to the International Maritime Organization’s 2020 low-sulphur fuel cap of 0.5% that enters force in January. As reported by A review by consulting firm AlixPartners concluded shipping lines would need "significantly higher" surcharges ranging from 33% to 40% depending on the route to offset the cost of the more expensive low sulfur fuel. ? Please enable Cookies and reload the page. CMA CGM has put a price to its low-sulfur surcharge per container moving on the North Europe-Asia trade. If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware. • Maersk will adjust its bunker adjustment factors (BAF) based on the price of low-sulfur fuels from Jan. 1 for long-term contracts of more than three months.For spot business and shorter contracts of less than three months, it is introducing on Dec. 1 an environmental fuel fee (EFF), a mechanism designed to recover the extra costs of the more expensive IMO 2020-compliant fuel. Whereas today ships can use fuel with […] The regulation will bring increases and uncertainty for fuel costs in maritime transport. Cloudflare Ray ID: 605d43ecb971e11e At the beginning of 2019, it introduced a new bunker adjustment factor surcharge to help defray the associated costs of meeting the low-sulphur fuel cap, with the total industry-wide bill for preparations put at $15bn. This is what IMO 2020 means and stands for.. How will the lower sulphur emission standards be achieved..? This level will be kept until further notice triggered by increase of fuel price. From 1st January 2020, a new regulation will come into force to reduce air pollution from ships globally. The German shipping company, Hamburg Süd, a subsidiary of Maersk, has announced the introduction of an “environmental fuel rate” (EFF) before the new IMO 2020 regulations. The high acceptance level among customers for the adjusted surcharge comes after a rough reception from one customer lobby group when Maersk made the announcement in September last year. Low Sulphur Surcharge - IMO 2020 (LSS) as of December 1 st, 2019 For long-term contracts (more than 3 months validity) BAF Formula based on VLSFO 0.50% as of January 1 , 2020 7. Maersk has notified customers, in an advisory note, that it will raise bunker prices, as their operational costs have significantly increased. MSC and CMA CGM have followed Maersk Line in announcing plans for surcharges to recover the cost of compliance with the IMO’s 2020 0.5% sulphur cap regulations. Maersk's management “is encouraged by high acceptance of bunker surcharges in contracts and recent market discipline and talk about mitigating higher fuel costs under IMO 2020 in the spot market”, according to David Kerstens, equity analyst at logistics investment consultancy Jefferies. Maersk customers absorb IMO 2020 bunker surcharges, 2021: Europe’s year for shipping’s regulations. Container lines implemented their IMO 2020 surcharges on Dec. 1. “Scrubbers cover around 30% of fuel consumption, while management expressed limited interest in [liquefied natural gas]; instead it would be looking at alternatives to further reduce carbon footprint longer-term.”. (Photo: Maersk) As late as last month, during APM-Maersk’s (AMBKY) Q2 earnings call, CEO Søren Skou insisted that the Danish shipping line did not take a favorable view of scrubbers as a means to comply with the IMO 2020 guidelines reducing … But concrete specifics and granular detail on the amount of expected fuel surcharge increases have been elusive – frustrating shippers who must budget for future transportation expenses. LSS will be calculated as follow: LSS IMO 2020 = (0.5% FUEL PRICE PER TON – OCT 2019 3.5% HIGH SULPHUR FUEL PRICE PER TON) X TRADE COEFFICIENT* *The trade coefficient represents the fuel consumption per carried TEU If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices. The company has seen acceptance of its bunker surcharge mechanisms in 80%-90% of its contracts, accounting for around half of the Danish shipping giant’s volumes. Performance & security by Cloudflare, Please complete the security check to access. • You may need to download version 2.0 now from the Chrome Web Store. Fuel cost would account for an even larger portion of total freight rate. This regulation has been developed and adopted by the International Maritime Organisation (IMO), a specialised agency under the United Nations (UN). Danish shipping company Maersk Line needs to reconsider its plan to introduce new fuel surcharge arrangements from January 1, 2019, the Global Shippers Forum (GSF) believes. Hapag-Lloyd will raise its low-sulfur surcharge for exports from China and Hong Kong on March 2 for 30 days following “strong price fluctuations” in the fuel price since the imposition of the IMO 2020 mandate on Jan. 1, the German container carrier said in a statement earlier this week. Ongoing unit cost reductions of 1%-2% are targeted, while there is limited room for M&A and cash returns for now.”. For Maersk Line, it is the Environmental Fuel Fee (EFF), Hapag-Lloyd is calling its surcharge the IMO 2020 Transition Charge (ITC), HMM has labeled theirs the Environmental Compliance Charge (ECC), while CMA CGM has gone with Low Sulfur Surcharge (LSS20). World’s largest container shipping company Maersk Line is planning to introduce a new fuel adjustment surcharge ahead of the 2020 sulphur cap. The recent drop in fuel price means that Maersk EFF level will be set at ZERO as of May 1st, 2020. Please log in below to view the rest of this page. Low Sulphur Surcharge – IMO 2020 (LSS) as of December 1st, 2019. IMO 2020: Imminent fuel surcharge increase amplifies ocean shipping uncertainty Low sulfur fuel oil (LSFO) has been a major topic of discussion in the ocean shipping industry this year. Maersk’s chief executive and chief financial officer indicated that they are encouraged by recent container market discipline and talk about potential bunker surcharges in the spot market. CMA CGM has introduced a Low Sulphur Surcharge (LSS20) effective December 1st, 2019 to cover the increase in fuel-related costs associated with the implementation of the IMO 2020 regulation. Maersk IMO sulfur regulation: The new surcharge of the Bunker Adjustment Factor (BAF) aims to recover the compliance costs of Maersk Line with the global sulfur limit, which requires the use of fuel with a sulfur content of 0.5% instead of 3,5%. We expect fuel price will continue to be subject to high volatility. Mr Kerstens said: “We estimated earlier bunker costs could increase by 15%-20% under IMO 2020. Another way to prevent getting this page in the future is to use Privacy Pass. The IMO 2020-compliant fuel is expected to be 50% more expensive than the fuel currently used by cargo ships, according to Drewry. ... the fuel of choice for IMO 2020 compliance -- is … The Danish shipping giant says that it had already informed customers during the course of 2019 that the new IMO 2020 regulation would bring … Maersk customers absorb IMO 2020 bunker surcharges Maersk management indicates a ‘high acceptance’ by customers in 80%-90% of its contracts, accounting for around half of the Danish shipping giant’s volumes 13 Sep 2019 “Slow steaming is seen as more likely than accelerated scrapping to improve fuel efficiency. Read the latest press releases, news articles, advisories and rate announcements from Maersk. Whereas today ships can use fuel with up to 3.5% sulphur content (outside Emission Control Areas), the new global sulphur cap will be 0.5%. Despite initial resistance from shipper groups, liner customers are coming to accept they will foot the bill for low-sulphur fuel. In the case of larger container ships doing long-haul routes, that transition has almost certainly already occurred (to prevent a ship from still carrying 3.5% sulfur fuel in mid-voyage on the deadline day). Completing the CAPTCHA proves you are a human and gives you temporary access to the web property. See article on IMO 2020 regulation. It further says that it had already informed customers during the course of 2019 that the new IMO 2020 regulation would bring … Maersk also notified customers, in an advisory note, that it will raise bunker prices, as their operational costs have significantly increased. The Global Shippers Forum reacted with “suspicion” at the time, arguing that the surcharge “lacks transparency; no data is available to let customers work out how the charge has been calculated”. As Maersk has communicated during the course of 2019, the switch of marine fuel to comply with the IMO Low Sulphur Cap regulation effective 1 January 2020, would bring substantial cost increase for ocean shipping. TweetShareSharePin The new BAF surcharge aims at recovering the Maersk Line costs of compliance with the global sulphur cap which enters into force on 1 January 2020. This regulation has been developed and adopted by the International Maritime Organisation (IMO), a specialised agency under the United Nations (UN). The list of new surcharges come four weeks after Maersk (Nasdaq OMX: MAER.B) introduced its own surcharge formula for the 2020 switchover. The new ‘BAF’ surcharge aims at recovering the Maersk Line costs of compliance with the global sulphur cap which enters into force on 1 January 2020. MAERSK says it has seen a “high acceptance” by its customers of its bunker surcharge mechanisms in 80%-90% of its contracts, as it prepares shippers for a significant rise in fuel costs due to new global low-sulphur fuel rules that come into force next year. The company’s senior management team has told analysts that slow steaming was more likely than accelerated scrapping to improve fuel efficiency. Maersk joins Hapag-Lloyd in levying low-sulfur surcharge Greg Knowler, Senior Europe Editor | Nov 01, 2019 1:37PM EDT Carriers do not plan on carrying any of the costs of complying with the IMO 2020 low-sulfur fuel regulations, and will levy a surcharge on spot rates and shorter contracts. The new BAF surcharge aims at recovering the Maersk Line costs of compliance with the global sulphur cap which enters into force on 1 January 2020. The French carrier said that although it was “in favour of using LSFO (low-sulphur fuel oil) for its […] Maersk has previously estimated a $2bn rise in its annual fuel costs due to the International Maritime Organization’s 2020 low-sulphur fuel cap of 0.5% that enters force in January. Dive Brief: ONE will implement a bunker surcharge on all new contracts beginning Jan. 1, 2019, "to be valid till further notice," to help offset the costs of preparing for the International Maritime Organization (IMO) 2020 sulfur regulations change, the shipping line said in an advisory. Maersk Line will only charge for the "extra cost of compliance" as the carrier introduces new IMO 2020 low-sulfur fuels in the coming months. This regulation has been developed and adopted by the International Maritime Organisation (IMO), a specialised agency under the United Nations (UN). Maersk is revising Terminal Handling Service – Origin/Terminal Handling Service - Destination (OHC/DHC) for all cargo containers for World to/from Mauritius effective 01st January 2021 for Non-regulated countries and effective 11th January for Regulated countries. However, these prices are set to change, as demand for high-sulphur fuel oil is expected to fall by 65%, while demand for low-sulphur fuel oil could increase fivefold. Meanwhile, Maersk has invested to reduce the impact of higher fuel bills by signing an agreement to produce IMO 2020-compliant bunker fuel. Find the latest information now! 16 Dec 2020 Your IP: 209.59.187.204 The EFF is applicable to Maersk Spot and all contracts with validity up to three months. As per this decision, MARPOL Annex VI has been revised, lowering the current global limit for sulphur content of marine fuels from 3.50% to 0.50% as from the 1st of January 2020.. 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