In one of our previous articles about IMO 2020 Sulphur Cap, we reported that many shipping lines will be adopting the regulations but also implementing a bunker surcharge to cover the same..
MSC is one of the lines that have announced the introduction of 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 IMO 2020 Sulphur cap..
They announced that the costs for compliance will have to be passed on to customers/trade through the implementation of new or adjustment to existing fuel surcharges, which may vary based on the trade lanes..
As per their press release, MSC estimates that the cost of the various changes that will need to be made to their fleet and its fuel supply is in excess of two billion dollars (USD) per year and that they have already started incurring these costs to be ready for 2020..
MSC believes 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 and that the passing on of these costs is also vital to ensure the sustainable future of the container shipping industry..
MSC has established a new price mechanism – the BRC (Bunker Recovery Charge) – which will be transparent to respective trades and will reflect the true additional cost that MSC will incur as a result of the regulatory changes required to support the UN International Maritime Organization’s 2020 Sulphur fuel content regime..
As per MSC, 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.. The other charges related to coastal Emission Control Areas (ECAs) will remain in place..
You can read the full calculation mechanism here..