Moreover, the new regulation will also impact the price of the Very Low Sulphur Fuel Oil (VLSFO), as it is expected to increase, in comparison to the present High Sulphur Fuel Oil (HSFO). Therefore, the company will present a new price reference in its short term and long term contracts.
The company highlights that for those interested in three-month contracts or shorter, they will imply a new monthly charge – Low Sulphur Surcharge (LSS), which will be effective from December 1, 2019.
Additionally, the company announced that it will provide three different solutions:
- using liquid natural gas-powered vessels;
- using advanced air quality systems onboard our vessels;
- as the main solution, using compliant fuels.
For long-term contracts of more than 3 months’ validity, the VLSFO will replace HSFO as the price reference for the quarterly Bunker Adjustment Factor (BAF), effective 1 January 2020. The company notes that the BAF quantum for reefer cargo will be 20% higher than that of dry cargo for the same container size, with a minimum of USD25/TEU.
IMO's 2020 sulphur cap implies that sulphur in fuel oil must be reduced from 3.50% to 0.50%, in addition to the 0.10% sulphur limit already effective in the Emission Control Areas (ECA). This aims to reduce the amount of sulphur oxide emissions and should have major health and environmental benefits globally, including improving air quality and reducing risks of acidification of the oceans.