Carriers announcing low sulfur surcharges for containers

Shippers face a price jolt as regulations require ships to burn fuel with one-tenth as much sulfur close to shore.    Shippers are beginning to get a better idea of the increased costs they will face next year, as container carriers begin to detail their plans for special bunker surcharges in light of the requirement that ships burn cleaner fuel.
   Starting in January, vessels in so-called emission control areas in North America and parts of North Europe (including the Baltic Sea, North Sea and the English Channel) will be subject to new fuel-burn restrictions. The requirements, which will be applied within 200 nautical miles of the American and Canadian shores, will lower the maximum allowed content of sulfur in fuel burned to 0.1 percent sulfur from today’s 1 percent.
   Last week, MSC announced that charges could run as high as $185 per TEU (or $370 per FEU) for cargo moving between Canada and ports on the Baltic, or as low as $5 per TEU for cargo moving between Central America and Freeport in the Bahamas. Maersk said this week that it will introduce a low-sulfur surcharge on Jan. 1 on all shipments routing through the ECAs.
   “Fuel with a sulfur content of 0.1 percent is significantly more expensive than fuel comprised of 1-percent sulfur. Based on the current price difference of $260 per ton, the additional cost to Maersk liner business is estimated at $200 million per year,” the Danish carrier said.
   Maersk said the charges will vary by trade, but will range, for example, from $30 per FEU for cargo moving between North America and Oceania to $160 per FEU for cargo moving between Canada and North Europe. The charge will be the same on dry and reefer containers.
   It noted in the trade between Asia and North America, the Transpacific Stabilization Agreement, a discussion agreement between carriers that move more than 90 percent of container trade, “is developing a low-sulfur surcharge, and Maersk Line intends to follow the tariff recommended by the TSA for relevant trades.”
   TSA said Wednesday it is studying the addition of a low-sulfur fuel cost recovery component, and it expects to announce it in the next several weeks. This will reflect new MARPOL sulfur oxide emission rules that take effect on Jan. 1, which are expected to result in hundreds of millions of dollars in additional financial impact to carriers.
   CMA CGM has also published a detailed schedule for its low sulfur surcharge that can run as high as $300 per FEU for cargo moving between ports on the U.S. East Coast south of Charleston and Scandinavia, Baltic, and UK East Coast outports.