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Maersk joins Hapag-Lloyd in levying low-sulfur surcharge    04/11/2019
Maersk became the second carrier to announce a low-sulfur surcharge targeting spot and shorter-term contracts.

Carrier determination to pass on all additional costs associated with the switch to low-sulfur fuel was made even clearer as Maersk Line joined Hapag-Lloyd in announcing a surcharge for containerized cargo moving on spot rates and short-term contracts.

The surcharge is intended to cover the cost of complying with the IMO 2020 regulation that takes effect Jan. 1.

In an advisory sent to customers Friday, Maersk said a new “Environmental Fuel Fee,” or EFF, would be applied to all spot business and contracts of up to three months from Dec. 1. The EFF tariff will be trade-specific and reflect the fuel-related increases incurred from compliance with the IMO 2020 rule, the carrier noted.

Hapag-Lloyd this week also announced it was levying a new surcharge from Dec. 1 aimed at the spot market and shorter contracts, which it named the IMO 2020 Transition Charge (ITC). 

But the difference is the Hapag-Lloyd surcharge is temporary. “Once things settle and stabilize, we will very likely cancel the charge,” a Hapag-Lloyd spokesperson said. Maersk said its EFF would only be reviewed if there were significant price fluctuations of more than $50 per ton.

Covering all contracts

Maersk said the Bunker Adjustment Factor (BAF) formula announced earlier this year was designed to adjust contract rates within the duration of a contract based on fluctuations of the fuel-related costs, and it applied to contracts with a duration in excess of three months. This new surcharge was aimed at covering the cargo that fell outside those contracts.

When he announced the interim surcharge, Hapag-Lloyd CEO Rolf Habben Jansen said price volatility would increase during the transition period over the next two months as carriers began loading the new fuel. Although the IMO low-sulfur fuel mandate takes effect Jan. 1, carriers will need to begin switching to the new and more expensive fuel as early as mid-November. The rule requires carriers to burn fuel with a sulfur content of not more than 0.5 percent, down from the current cap of 3.5 percent. Carriers can continue burning high-sulfur fuel if they install emissions-cleaning scrubbers on vessels.

“Switching from high-sulfur fuels to the new low-sulfur fuel will inevitably result in higher fuel prices in the short term,” Habben Jansen said in a statement. “Given these circumstances, we will implement the ITC to cope with the additional costs as well as to have a sustainable and transparent method of pricing our services for our customers.”

Carriers remain adamant they will pass on the additional costs via surcharges, and informing the size of those surcharges will be the price differential between high-sulfur and low-sulfur fuel. It will come as no comfort to shippers that the spread between the two fuels this week widened to 58 percent.

 




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