IMO 2020: new fuel surcharge per 1 December 2019

27 November 2019

As of 1 January 2020, the fuel oil used by container ships will only be allowed to contain 0.5% sulphur. This will reduce sulphur emissions from global ocean freight by 80%. These new sulphur regulations drawn up by the International Maritime Organization (IMO) do, however, also entail enormous costs. Per 1 December 2019, shipping companies will reflect these costs in a fuel surcharge.

Level of the fuel surcharge

Earlier this year it became clear that the new sulphur rules would result in a high fuel surcharge. This surcharge will cover the significant expenses incurred by shipping companies. This surcharge was expected to be approximately $200 – $300 per TEU. It now seems, however, that the actual fuel surcharge is much lower.

The so-called IMO surcharge differs per shipping company and lies between USD 71/TEU and USD 120/TEU. This will be charged starting 1 December 2019 on board. Due to the large differences in the level of the fuel surcharge but also in sea freight rates, Ritra Cargo will not charge these two separately to you. We will add the IMO surcharge to your applicable ocean freight rate.

More capacity pressure, even higher rates

In the months of December and January, there is traditionally an enormous peak in the number of reservations. In this period, importers ship many seasonal products from the Far East. Chinese New Year, which takes place at the end of January, will also place additional pressure on the shipping capacity this year.

This combination of circumstances will also affect sea freight rates. The introduction of the new fuel surcharge also coincides with the start of the peak season. This will result in even higher sea freight rates starting on 1 December than you are used to during this period.

Uncontrolled growth of fuel surcharges

Shipping companies currently charge a range of fuel surcharges. You may have spotted the Low Sulphur Surcharge (LSS) and the Emergency Bunker Surcharge (EBS) on an invoice. Some shipping companies include these fuel surcharges in the ocean freight rate, while others charge them separately. The IMO surcharge will be added to these fees on 1 December 2019. Each shipping company will charge this separately in addition to any existing fuel surcharges.

Questions?

Please feel free to contact us via telephone or email with any questions concerning the new fuel surcharge.