World’s largest container shipping company Maersk Line is planning to introduce a new fuel adjustment surcharge ahead of the 2020 sulphur cap. Meanwhile, Maersk has invested to reduce the impact of higher fuel bills by signing an agreement to produce IMO 2020-compliant bunker fuel. 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.. This is what IMO 2020 means and stands for.. How will the lower sulphur emission standards be achieved..? Despite initial resistance from shipper groups, liner customers are coming to accept they will foot the bill for low-sulphur fuel. 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. 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. It further says that it had already informed customers during the course of 2019 that the new IMO 2020 regulation would bring … Low Sulphur Surcharge – IMO 2020 (LSS) as of December 1st, 2019. This regulation has been developed and adopted by the International Maritime Organisation (IMO), a specialised agency under the United Nations (UN). IMO 2020: CMA CGM gives low-sulfur surcharge … Please enable Cookies and reload the page. As reported by This regulation has been developed and adopted by the International Maritime Organisation (IMO), a specialised agency under the United Nations (UN). 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. Maersk Jacks Up Fuel Surcharge as Shipping’s Biggest Expense Spirals By . 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. 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. 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%. 16 Dec 2020 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. 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. “Slow steaming is seen as more likely than accelerated scrapping to improve fuel efficiency. 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. The French carrier said that although it was “in favour of using LSFO (low-sulphur fuel oil) for its […] (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 … “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.”. 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%. Maersk customers absorb IMO 2020 bunker surcharges, 2021: Europe’s year for shipping’s regulations. ... the fuel of choice for IMO 2020 compliance -- is … 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. 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. 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”. The EFF is applicable to Maersk Spot and all contracts with validity up to three months. 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. Performance & security by Cloudflare, Please complete the security check to access. We expect fuel price will continue to be subject to high volatility. Maersk also notified customers, in an advisory note, that it will raise bunker prices, as their operational costs have significantly increased. Firat Kayakiran. Completing the CAPTCHA proves you are a human and gives you temporary access to the web property. The IMO 2020-compliant fuel is expected to be 50% more expensive than the fuel currently used by cargo ships, according to Drewry. This regulation has been developed and adopted by the International Maritime Organisation (IMO), a specialised agency under the United Nations (UN). 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. 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 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 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. 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). Whereas today ships can use fuel with […] 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. 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