Hamburg-based Hapag-Lloyd will apply a sulfur transition charge to short-term contracts to offset the additional costs from complying with the International Maritime Organization’s (IMO) sulfur policy, which takes effect come 2020.
The German ocean shipping liner said it has taken various actions to be fully compliant with the new regulations on sulfur emissions and that “adjusting to IMO2020 comes along with significantly higher costs for the whole industry.”
“To mitigate fuel price volatility and transitional operational expenses, Hapag-Lloyd will introduce an IMO2020 Transition Charge (ITC) for short-term contracts as of 1 December 2019,” it said in a statement on October 31.
Switching from high-sulfur fuels to the new low-sulfur fuel will inevitably result in higher fuel prices in the short term, it added. Volatility is also expected to increase, particularly during the transition period.
“Given these circumstances, we will implement the ITC to cope with the additional costs as well as to have a sustainable and transparent method of pricing our services for our customers,” explained Rolf Habben Jansen, chief executive officer of Hapag-Lloyd.
The ITC applies to freight of all kinds of cargo and spot business with a validity of up to three months. Tender business will not be affected by the ITC.
The introduction of the IMO2020 sulfur cap as of January 1, 2020 marks a milestone for the shipping industry to reduce marine pollution and become more sustainable.