Hapag-Lloyd to implement sulfur fuel surcharge

The following is text of a news release from Hapag-Lloyd:

(HAMBURG, Germany) — The maritime industry is facing great changes: Starting Jan. 1, 2020, vessels will only be allowed to use fuel with a maximum sulfur content of 0.5 percent. The current standard is fuels with a sulfur cap of 3.5 percent. The so-called IMO 2020 regulation is the first in a series of International Maritime Organization (IMO) measures to reduce marine pollution. Using low-sulfur fuel oil will be the key solution for the shipping industry and Hapag-Lloyd to remain compliant. Furthermore, it is the most environmentally friendly solution in the short term.

The stricter IMO emissions regulation will significantly improve the ecological footprint of the shipping industry. Based on the assumption that the spread between high-sulfur fuel oil (HSFO) and low-sulfur fuel oil (LSFO 0.5 percent) will be $250 U.S. per tonne by 2020, Hapag-Lloyd estimates additional costs of around $1 billion U.S. in the first years. For this reason, Hapag-Lloyd has developed the marine fuel recovery (MFR) mechanism, which will be gradually implemented starting on Jan. 1, 2019.

With our new MFR mechanism, we have developed a system for our customers that we think is fair, as it allows for a causal, transparent an easy-to-understand calculation of fuel costs. The MFR, which will be reviewed quarterly (or monthly if fuel price fluctuations are above $45 per tonne), takes into consideration various parameters, such as the vessel consumption per day, fuel type and price (specific for HSFO, LSFO 0.5 percent and LSFO 0.1 percent), sea and port days, and carried TEU. These parameters derive from a typical representative service in the market on a specific trade.

Our vessels will start refueling with the more expensive LSFO 0.5 percent in Q4 2019 in order to fully comply with IMO 2020 as from Jan. 1, 2020.

By Professional Mariner Staff