South African shippers can expect to pay around $120 dollars per TEU extra in the run-up to January 1 when the International Maritime Organisation (IMO) implements the new regulation for a 0.50% global sulphur cap for marine fuels. According to Mike Walwyn, chairman of the Cape’s Port Liaison Forum (PLF), shipping lines are in the process of introducing this new surcharge to recoup low sulphur costs. “From what we have seen so far South African shippers can expect an average of about $120 per TEU,” he told FTW. “The surcharge is to cover the costs that lines have incurred to ensure compliance with the low sulphur cap. The charges range from anything between $100 to $180 per TEU. Walwyn said shippers needed to prepare for the surcharge which was set to be introduced during December as it was not a cost that could be argued. “It is a surcharge that has been flying under the radar, but it is going to be enforced – and as industry we will have to deal with this added cost.” Londonbased consultant Drewry has been advising shippers across the world to brace themselves for these bunker adjustment factors (BAFs). In a statement Drewry said these costs were expected to soar closer to the end-of-the-year deadline and into the first quarter of 2020. “BAFs will be very volatile in the first half of 2020,” reads a statement. At the same time the cost of marine fuel is expected to increase in 2020, with low sulphur fuel expected to be far more expensive than the current fuel being used. “The demand for low-sulphur fuel will increase considerably by November/December,” Drewry noted. “We believe that the chances are that low-sulphur bunker prices will, after increasing in 2020, fall in 2021 and 2022 as the initial price premium decreases.” Walwyn said bunkering opportunities in South Africa were expected to be limited considering the large amounts of bunkering already lost in the country due to the dilapidated infrastructure, the expensive nature of our ports, and the heavy competition from ports such as Rotterdam and Singapore.
INSERT: It is a surcharge that has been flying under the radar, but it is going to be enforced. – Mike Walwyn