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Box lines plan transpacific low sulphur fuel charge

Box lines plan transpacific low sulphur fuel charge
Member lines of the Transpacific Stabilisation Agreement (TSA) are planning a low sulphur surcharge to offset “hundreds of millions” of dollars in extra costs from the 0.1% sulphur limit.

The North American emission control area (ECA) will enforce a 0.1% sulphur limit from 1 January 2015 meaning that lines will most likely either have to burn MGO or use scrubbers to clean exhaust fumes.

Planned new recommended minimum contract rates for 2015 – 16 contracts will also include a low sulphur fuel recovery component that TSA expects to announce in the next few weeks. TSA said lines would incur “hundreds of millions of dollars” in financial impact from the new sulphur limits.

“The stricter 0.1% emissions mandate, requiring a shift to costlier marine gas oil (MGO), is of special concern because it will hit the trade all at once and no one can predict just yet where prices will settle,” explained Brian Conrad, TSA executive administrator. “That in turn makes it difficult to adapt our existing formula, but we expect to have a clearer picture closer to 1 January, in time to announce a charge with the necessary advance notice.”

Some lines such as Maersk Line and Mediterranean Shipping Co (MSC) have already announced ECA surcharges for 2015.