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Hapag-Lloyd introduces Marine Fuel Recovery mechanism

09 Oct 2018

International shipping firm Hapag-Lloyd has introduced a Marine Fuel Recovery (MFR) mechanism which will be gradually implemented from 1 January 2019 to replace all existing fuel-related charges, as part of preparations for IMO 2020.

The MFR takes into account various parameters, such as the vessel consumption per day, fuel type & price (specific for HSFO, LSFO 0.5% and LSFO 0.1%), sea and port days, and carried TEU; these parameters derive from a typical representative service in the market on a specific trade.

The MFR also takes price fluctuations better into account, as it comes along with an improved coverage of upward and downward developments of market price changes for fuel oil. Overall, it aims for transparent calculation of costs.

“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,” said Rolf Habben Jansen, Chief Executive Officer of Hapag-Lloyd.

“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.

“With our MFR, we have developed a system for our customers that we think is fair, as it allows for a causal, transparent an easy-to-understand calculation of fuel costs.”

The utilisation of compliant low-sulphur fuel oil comes along with an increase in fuel costs, which experts estimate to initially amount up to USD $60 billion annually for the entire shipping industry, it believes.

On the assumption that the spread between high-sulphur fuel oil (HSFO) and low-sulphur fuel oil (LSFO 0.5%) will be USD $250 dollars per tonne by 2020, Hapag-Lloyd estimates its additional costs being around USD $1 billion dollars in the first years of IMO 2020.

Photo credit: Hapag-Lloyd
Published: 9 October, 2018


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