What do you need to know about Low Sulphur IMO 2020 regulation?
The new International Maritime Organization (IMO) Low Sulphur Regulation will be effective from 1 January 2020 and will require all shipping companies to reduce their Sulphur emissions by 85%.
This new regulation aims to reduce the environmental impact of the industry and significantly improve air quality, an initiative in which the CMA CGM Group has been involved for more than 15 years.
CMA CGM will be fully compliant as of January 1st, 2020 and has decided:
- to favor the use of Very Low Sulphur Fuel Oil (with 0.5% Sulphur) for its fleet,
- and to invest significantly:
- by using Liquefied Natural Gas to power some of its future container ships (20 ships by 2022, including 9 vessels of 23,000-TEUs), notably resulting in a 99% reduction in sulphur oxides and fine particles emissions,
- by ordering several scrubbers for its ships.
What does it mean for our customers?
All these measures represent a major additional cost. This cost will be taken into account through the application of fuel surcharges on a trade-by-trade basis.
- For short-term contracts (up to 3 months validity):
Low Sulphur Surcharge – IMO 2020 (LSS) as of December 1st, 2019. LSS will be calculated as follow:
LSS IMO 2020 = (0.5% FUEL PRICE PER TON – OCT 2019 3.5% HIGH SULPHUR FUEL PRICE PER TON) X TRADE COEFFICIENT*
*The trade coefficient represents the fuel consumption per carried TEU
To know more about LSS IMO 2020 update
- For long-term contracts (more than 3 months validity):
BAF Formula based on VLSFO 0.5% as of January 1st, 2020. It is calculated as follow:
BAF = 0.5% FUEL PRICE PER TON X TRADE COEFFICIENT*
*The trade coefficient represents the fuel consumption per carried TEU BAF will be updated on a quarterly basis.Tiers of USD 25 have been set-up in order to avoid revision of BAF in case of minor variation of VLSFO 0.5% price.