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CMA CGM Says Global Sulphur Cap to Cost Customers $160 Per TEU on Average

French shipping giant CMA CGM on Monday (24 Sep ’18) said the 2020 global sulphur cap regulation will cost an estimated $160 per twenty-foot container or equivalent unit (TEU) to be paid by its customers in the form of a fuel surcharge.

CMA CGM, the world’s fourth-largest container shipping line by overall TEU volume, is the latest of the major ocean carriers to reveal how it intends to handle the International Maritime Organization’s low sulphur fuel regulation entering into force beginning January 1, 2020.

The regulation aims to reduce the environmental impact of the shipping industry by lowering the sulphur content in the fuel burned by ships to a maximum 0.5%. Ships can also comply by installing exhaust gas scrubbers or by switching to low sulphur alternative such as LNG. 

To comply with the impending regulation, CMA CGM says has opted to favor the use low sulphur bunker fuel, but it will also invest significantly in LNG fuel for its future newbuildings and order several scrubbers for some of its ships.

Overall, however, these investments add up to additional costs for shippers.

“All these measures represent a major additional cost estimated, based on current conditions, at an average of 160 USD / TEU (twenty-foot equivalent unit),” CMA CGM said in a press release. “This additional cost will be taken into account through the application or adjustment of fuel surcharges on a trade-by-trade basis.”

CMA CGM Senior Vice President Commercial Agencies Network, Mathieu Friedberg, explained:

“The implementation of this new regulation, which represents a major environmental advance for our sector, will affect all players in the shipping industry. In line with its commitments, the Group will comply with the regulation issued by the IMO as from 1 January 2020. In this context, we will inevitably have to review our sales policy regarding fuel surcharges.”

Last week, the world’s top shipping company Maersk, sent a letter to customers announcing a new bunker fuel surcharge to be imposed on shippers to help cover the estimated $2 billion per year increase in fuel costs estimated by Maersk as a result of the new regulation.

James Hookham, GSF Secretary General understands this bunker fuel surcharge from the shipping lines but he says with reference to Maersk that this charge lacks transparency and the customers do not know how the charge has been calculated. He also pointed out that Maersk has other options too.

 In fact, he had even indicated that soon others would follow Maersk and that is what we see now; MSC and CMA CGM have followed Maersk close at heels.

 

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