Bunker Surcharge Alert! OOCL Plan on Floating Bunker Formula


Over the years, the industry has seen an increasing amount of attention given to the environmental impact from the global supply chain, resulting in regulations on emissions control and environmental protection becoming more stringent and widespread across the world. OOCL in a press release has announced its moves towards meeting IMO 2020 regulations.

OOCL is one of the leading international carriers serving China, providing a full range of logistics and transportation services throughout the country. It is also an industry leader in the use of information technology and e-commerce to manage the entire cargo process.

Protecting the environment

It may be in the form of introducing or expanding Emissions Control Areas (ECA) on the regional level, meeting slow steaming requirements during sensitive seasons to avoid whale strikes at the local level, or investing in more efficient ships with the latest environment friendly features to meet emissions reduction targets, OOCL says, they have all been doing their part to contribute to the protection of the environment.

OOCL taking the leadership

OOCL has consistently outperformed many international requirements and industry standards by proactively taking on a leadership role in implementing many important initiatives to address global environmental challenges.

Green investment on our assets, development of green IT solutions, better Greenhouse Gas management, and participation in global environmental initiatives, contributing to the success and development of our environmental sustainability profile are few among them.

OOCL’s transition

Moving forward, the industry will be stepping into an important phase in its history by ensuring all ocean-going vessels in our fleets are able to meet the International Maritime Organization’s (IMO) new Sulphur cap regulation by January 2020.

With this new Sulphur cap on marine fuel lowering from 3.5% to 0.5%, approximately 85% of Sulphur emissions are expected to be reduced but at a significant cost to the entire industry and the cost is estimated at about US$60 billion each year.

Currently, the industry has been grappling with the challenges associated to fleet adjustment options, including uncertainties in the availability and accessibility of the 0.5% Low Sulphur Fuel (LSF) in the market and the premium that will be charged for the cleaner fuel.

To ensure compliance by the deadline, OOCL announces its plans to begin its transition into the use of LSF for our entire fleet during the second half of 2019.

Shoulder the burden

The expected bunker consumption of our fleet and the projected price difference from switching to the compliant fuel which may possibly become increasingly expensive due to tight supply in the market, it is expected that the additional cost impact will easily fall well above half a billion dollars. Under the current industry environment and the level of cost involved in an industry that is already very cost-sensitive for survival, shippers and the consumers will need to prepare to shoulder this burden.

Bunker recovery approach

To meet the surge in this operating cost and in consideration of the continuing trend of rising fuel prices in the market, OOCL will be introducing a bunker recovery approach based on a floating bunker formula that will better reflect the changes in the industry environment.

The various factors this approach will take into account include, the different fuel types being used, fuel price fluctuations, ship size and capacity, and vessel utilization levels.

OOCL mentions, they believe that they are taking the right step towards a greener and more transparent direction forward in the industry as all embrace the IMO 2020 Regulation together. As a responsible and committed member of the international community, OOCL says, it will continue to work closely with customers and business partners to strive for further improvements in all aspects of businesses for a greener future in the generations to come.

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