OOCL is to comply with the sulphur cap by switching to low sulphur compliant fuels during the second half of 2019 ahead of the 1 January 2020 deadline. The container line said that it expects the additional cost of 0.5% or less compliant fuel to have impact “to easily fall well above half a billion dollars” a year for the company, with prices of low sulphur fuel driven up by the tight market.
“Under the current industry environment and the level of cost involved to an industry that is already very cost-sensitive for survival, shippers and the consumers will need to prepare to shoulder this burden,” the Hong Kong-headquartered line said in a statement.
Michael Fitzgerald deputy cfo of Orient Overseas International Ltd (OOIL), parent of OOCL, said recently the cost should be passed and ultimately to the end customer – the consumer.
OOCL said would be introducing a bunker recovery charge based on a floating bunker formula taking into various factors into account, including the different fuel types being used, fuel price fluctuations, ship size and capacity, and vessel utilisation levels.
OOCL joins Hapag-Lloyd, Maersk Line, MSC, CMA CGM and Ocean Network Express in announcing plans for a new bunker surcharge to cover the additional cost of low sulphur fuel in the run up to, and after, the 1 January 2020 introduction of the IMO’s global 0.5% sulphur cap for marine fuel.