MSC announces low-sulfur surcharges in North Europe, North America

Mediterranean Shipping Co. today unveiled surcharges of up to $165 per 20-foot container on North European and North American routes that will be subject to new low-sulfur limits in 2015.

The Geneva-based carrier said shippers and receivers will have to pay for the “significant” increase in the cost of fuel in the affected emission control areas, or ECAs, according to individual trade lanes. Ships passing through the ECAs ― the Baltic Sea, the North Sea, the English Channel and 200 nautical miles from the American and Canadian shores ― will be compelled to burn fuel with a sulfur content of 0.1 percent from Jan. 1 compared with the current 1.0 percent limit, as mandated by the International Maritime Organization.

The MSC surcharges vary widely from a high of $165 per TEU for shipments between Canada and the Baltic to a low of $5 per TEU between Central America and Freeport, Texas. Shippers face a surcharge of $130 per TEU on the U.S.-Baltic trade, $150 between the Baltic and the U.S. West Coast and $50 per TEU on routes between the U.S. and India. The surcharge on MSC’s Lion and Silk services between Asia and northwest Europe is just $15 per TEU because the low-sulfur limit does not apply in Far East waters.

Low-sulfur fuel of 0.1 percent is around $300 per metric ton cheaper than 1.0 percent fuel. Low-sulfur fuel of 1.0 percent averaged $559.90 per metric ton for the week ending Sept. 12, according to numbers provided by BunkerVision. One metric ton is equivalent to about 6.4 barrels or 300 gallons.

Maersk Line has warned customers they face hikes of between $50 and $150 per 40-foot container to enable it to recoup the estimated $250 million a year increase in its fuel bill. The carrier says it will publish more details closer to the implementation of the new sulfur rules and when price differences between fuels can be more precisely estimated. Hapag-Lloyd and Rickmers-Linie have also advised shippers they face low-sulfur surcharges from January.

The looming IMO requirements for low-sulfur fuel will likely prod more ocean carriers to implement these types of surcharges. These rules are also creating momentum around the use of liquefied natural gas to power container ships on long-haul international routes, as well as regional feeder services.

| Sep 15, 2014 12:17PM EDT

http://www.joc.com/maritime-news/international-freight-shipping/msc-announces-low-sulfur-surcharges-north-europe-north-america_20140915.html

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