Ahead of the 2020 sulphur cap, Hapag Lloyd said that using low-sulphur fuel oil will be the key solution for the company to remain compliant. This fuel however, comes with an increase in fuel costs, something that made Hapag Lloyd establish a Marine Fuel Recovery (MFR) mechanism. This will be gradually implemented from 1 January 2019 and replace all existing fuel-related charges.
Hapag-Lloyd estimates its additional costs to be around 1 billion US dollars in the first years. For this reason it will establish a Marine Fuel Recovery mechanism from 1 January 2019.
MFR will consider various parameters, such as the vessel consumption per day, fuel type and price, sea and port days, and carried TEU. It also takes price fluctuations into account.
In addition, the company will continue looking for ways to reduce its emissions. This is why trials with a LNG conversion of one ship as well as scrubbers on two others will be carried out in the year 2019.
Rolf Habben Jansen, Chief Executive Officer of Hapag-Lloyd, stated:
We embrace the level playing field and environmental improvements resulting from a stricter regulation, but it is obvious that this is not for free and will create additional costs. This will be mainly reflected in the fuel bills for low-sulphur fuel oil, as there is no realistic alternative for the industry remaining compliant by 2020.