Hapag Lloyd Karachi collision

With just 60 days to go before the IMO’s 0.5% sulphur cap on marine fuels for ships not fitted with scrubbers becomes law, ocean carriers need to cover the extra cost of the compliant fuel or risk bankruptcy.

Container vessels without scrubbers installed, which will account for the vast majority of ships in service, will need to replenish their tanks with low-sulphur fuel oil (LSFO) in the coming weeks in order to be compliant for 1 January next year.

The ‘spread’ or price difference is currently projected to be around $200 per ton, which for example could add some $1m of cost to a roundtrip Asia – North Europe loop.

Most carriers have rolled out LSFO recovery models to go hand in hand with their long-term contract business, but the 50% or more of containers that they source from short-term contracts or the spot market is in danger of falling through the gap.

In this customer advisory Hapag-Lloyd sets out its IMO Transition Charge (ITC) fee for the spot market of $135 per teu for Asia – Europe and $130 per teu for Asia-North America which it will introduce on 1 December.