• DATVF.SEALAX
    1.289
    0.194
    17.7%
  • DATVF.LAXDAL
    1.605
    -0.016
    -1%
  • DATVF.DALLAX
    0.914
    -0.044
    -4.6%
  • DATVF.ATLPHL
    1.710
    -0.115
    -6.3%
  • DATVF.LAXSEA
    2.088
    -0.010
    -0.5%
  • DATVF.CHIATL
    2.024
    0.060
    3.1%
  • DATVF.VSU
    1.260
    -0.029
    -2.2%
  • DATVF.VWU
    1.688
    0.092
    5.8%
  • DATVF.VEU
    1.562
    -0.018
    -1.1%
  • DATVF.VNU
    1.503
    0.015
    1%
  • DATVF.PHLCHI
    0.953
    0.001
    0.1%
  • ITVI.USA
    10,331.830
    -120.380
    -1.2%
  • OTRI.USA
    8.090
    0.070
    0.9%
  • OTVI.USA
    10,350.660
    -119.540
    -1.1%
  • TLT.USA
    2.620
    0.010
    0.4%
  • WAIT.USA
    158.000
    8.000
    5.3%
  • DATVF.SEALAX
    1.289
    0.194
    17.7%
  • DATVF.LAXDAL
    1.605
    -0.016
    -1%
  • DATVF.DALLAX
    0.914
    -0.044
    -4.6%
  • DATVF.ATLPHL
    1.710
    -0.115
    -6.3%
  • DATVF.LAXSEA
    2.088
    -0.010
    -0.5%
  • DATVF.CHIATL
    2.024
    0.060
    3.1%
  • DATVF.VSU
    1.260
    -0.029
    -2.2%
  • DATVF.VWU
    1.688
    0.092
    5.8%
  • DATVF.VEU
    1.562
    -0.018
    -1.1%
  • DATVF.VNU
    1.503
    0.015
    1%
  • DATVF.PHLCHI
    0.953
    0.001
    0.1%
  • ITVI.USA
    10,331.830
    -120.380
    -1.2%
  • OTRI.USA
    8.090
    0.070
    0.9%
  • OTVI.USA
    10,350.660
    -119.540
    -1.1%
  • TLT.USA
    2.620
    0.010
    0.4%
  • WAIT.USA
    158.000
    8.000
    5.3%
American ShipperAsia-PacificContainerEnergyEuropeFuelInsightsInternationalMaritimeNewsShippers PerspectiveShippingSONAR Market Update

Maersk: Shippers will only pay for IMO 2020 ‘cost recovery’

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.

As reported by FreightWaves, shippers and forwarders have expressed dismay about the complexity of the charges being levied by some container lines as they phase in new low-sulfur bunker fuels ahead of the Jan. 1 International Maritime Organization deadline.

Shippers have also complained about a lack of transparency, suspecting that some container lines will use the introduction of the new fuels to bolster profits.

However, Silvia Ding, global head of ocean products for A.P. Møller – Maersk, told FreightWaves that while customers should expect to pay more due to the higher pricing of IMO 2020-compliant low-sulfur fuels, Maersk was only focused on recovering costs.

“Low-sulfur fuels are significantly more expensive,” she said. “As multiple industry reports have stated, being in a low-margin industry carriers cannot shoulder the cost alone; it must be passed on through the supply chain.”

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.

 “Our efforts for long-term BAFs and short-term EFFs focus on recovering the extra cost of compliance and are based on principles of simplicity and predictability for our customers to be able to plan their supply chains,” said Ding.

Unless some form of emission abatement technology such as scrubbers has been installed on vessels, the new IMO regulations mandate that the sulfur content of fuel oil used by ships operating outside designated emission control areas must not exceed 0.5%, compared to 3.5% now.

Drewry Shipping Consultants now estimates box shipping lines will be faced with an additional $11 billion fuel bill next year due to the switch to low-sulfur fuel oil, although the recent drone attacks on Saudi oil facilities have muddied estimates by adding to oil price volatility.

Shipping bodies also believe there could be fuel shortages and discrepancies in standards.

Ding admitted the introduction of low-sulfur fuels could see some fuel supply issues in the early weeks of next year. “We see sufficient availability of compliant fuels; however, we expect increased instances where ports in some confined areas see a limited supply of 0.5 compliant fuels,” she added. 

“In such cases we would rely on more expensive 0.1 marine gas oil to get to the next port with 0.5% fuel oil availability. This adds cost and complexity and we expect it to happen more frequently in the transition period around 1 January 2020 than later in 2020 where supply and demand is expected to balance out,” Ding said.

The carrier has established joint initiatives with Vopak, Koole and PBF Logistics for 0.5% compliant fuel storage and processing facilities in Rotterdam in the Netherlands and New Jersey in the United States.

“The fuel manufacturing process allows Maersk to produce compatible low-sulfur fuels that complies with the IMO 2020 sulfur cap implementation, reducing the need to rely on 0.1% price-based gasoil and fuel oil outside the ECA zones,” said Ding. “This will be an important driver in ensuring stable, reliable services for Maersk’s customers during a potentially volatile period for global shipping.”

FreightWaves articles by Mike

Tags
Show More

Mike King

After a decade in Asia, Mike is now based in the U.K. Growing up in a prominent Liverpool trucking family, he could shrink wrap a pallet and load a 40ft container with a forklift before his teen years. More by accident than design, his career in journalism led him back to his origins. Some 20 years later and after multiple editorships, highlights include covering Asia for JOC, becoming one of the youngest ever magazine editors at Lloyd’s and running the news desk at IFW/Lloyd’s Loading List. Recent business journalism award wins include Seahorse Air Cargo Journalist of the Year in 2012, Supply Chain Journalist of Year in 2016 and News Journalist of the Year in 2013 and 2017. In 2018 he was named the International Road Transport Union Journalist of the Year. Mike also has a long history working with NGOs fighting deforestation and corruption in Indonesia, he runs a charity in Nepal and has spent a decade investigating corruption and human rights abuses on behalf of a leading commercial risk intelligence company. He loves Liverpool FC and is a regular participant in the World Bog Snorkeling Championships.

Leave a Reply

Your email address will not be published. Required fields are marked *

Close