Following recent updates on IMO’s new 0.50% limit on sulphur in ships fuel oil, the Marine Environment Protection Committe (MEPC) has regulated that the sulphur content of any fuel oil used on board ships outside emission control (ECA) zones currently limited at 3.5% m/m shall not exceed 0.5% m/m on or after 1st January 2020.
The sulphur limits inside ECA zones being the Baltic Sea area, North Sea area, North American area and Caribbean Sea Area are lower still. Shipping lines have to choose from three costly options in order to be compliant:
- Switch to low sulphur fuel oil (LSFO) which currently costs about 60% more than high sulphur (HS)
- Invest in and retro – fit emission reduction scrubbers at the cost of $ 5 -10 million per ship to retro fit
- Build new liquefied natural gas (LNG) powered ships at an additional cost of about $ 20 million per ship.
The additional cost for shipping lines to switch to LSFO is approximately $400,000 - $800,000 per voyage.
This IMO rule will have a major impact on shipping costs. Carriers have said they cannot absorb these and will have to be shared with or passed on to consumers.
Whale has received notice from various shipping lines that there will be a surcharge due to switching to Low Sulfur Fuel Oil (LSFO), called a Low Sulfur Emission Surcharge (LSS). The ports of Shanghai and Ningbo have implemented the 0.50% sulphur limit on 1st October with LSS from Central China as detailed below:
- Shanghai Inland (Anhui; Chongqing; Gansu; Henan; Hubei; Jiangsu; Jiangxi; Qinghai; Shanxi; Sichuan; Hunan provinces)
- Ningbo Inland (Zhejiang provinces)
The LSS will not apply to LCL rates. Whale Logistics will unfortunately have to pass on this surcharge to our customers. Should you have any questions or concerns, please contact your Customer Success Manager.
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