2020 Sulphur Cap: Bunker Charge Mechanism for 2019

Dear Customers,

As we communicated in our 24 September advisory, MSC Mediterranean Shipping Company S.A. is introducing new bunker charges as of 1 January 2019 to achieve the common goal of improving environmental performance in the container shipping supply chain, as required by the 2020 Sulphur cap.

We believe that it is essential to segregate transparently the burden of fuel costs, in order for this cost to be passed on visibly throughout the supply chain. Passing on that cost is also vital to ensure the sustainable future of the container shipping industry.

With regard to the UN International Maritime Organization’s 2020 Sulphur fuel content regime, MSC has estimated that the cost of the various changes we are making to our fleet and its fuel supply is in excess of two billion dollars (USD) per year. We have already had to start incurring these costs to be ready for 2020.

After considerable analysis of operating costs and related market factors, MSC has established a new price mechanism – the BRC (Bunker Recovery Charge) – which will be transparent to respective trades. It will reflect the additional cost that MSC will incur as a result of the regulatory changes we all support in order to protect the environment.

The BRC replaces the current Bunker Contribution (BUC), Fuel Adjustment Factor (FAD) and Emergency Fuel Surcharge (EFS), and largely absorbs other pre-existing fuel-related charges. Charges specifically related to coastal Emission Control Areas (ECAs) will remain in place.

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