Introduction of low-sulfur fuels Shanghai and Ningbo sailing areas

30 November 2018

The sulfur emissions of ships represent a large proportion of the emissions of greenhouse gases. Therefore, low-sulfur fuels are introduced to more and more sailing areas in the world. The same applies to the Yangtze River Delta, where Shanghai and Ningbo are part of. However, the use of low-sulfur fuel is significantly more expensive. Therefore, shipping companies charge a Low Sulphur Surcharge (LSS) to suppliers who use sea cargo via and from these cities. The use of low-sulfur fuels will be mandatory worldwide as of 2020.

LSS will be passed on to the suppliers

From 1 October 2018, all ships in the Yangtze River Delta are required to use low-sulfur fuels. This measure, imposed by the China Maritime Safety Administration (MSA), is intended to reduce the harmful sulfur emissions of ships significantly.

Sanang and Ningbo are both part of the sailing area of the Yangtze River Delta. Therefore, there will be a surcharge added for transports via and from these cities from B/L date 2 December 2018. This will amount to $35 per TEU. The shipping companies will pass on the LSS to their suppliers.

Sulfur-low fuels are mandatory worldwide from 2020

On 1 January 2020, stricter rules to the permitted sulfur content in fuel oil will apply globally. Where this is still 3.5%, it should become only 0.5%. This has a major impact on shipping companies because it requires them to adjust the current procedures. Three scenarios are possible:

1. Sailing on low-sulfur fuels (0.5%)
2. Installing special filter systems in ships
3. Switching to liquid natural gas (LNG)

All these options have different advantages and disadvantages. What the shipping companies will choose is still to be determined at present. However, one thing is clear; the fuel costs will increase due to these measures. This will lead to an increase in price for container transportation by sea.

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