1. Implications of LSS low sulphur surcharge
The Sulphur Fuel Surcharge is one of the many charges for shipping, a relatively new one recently.
2. Origin of LSS
Under the environmental protection regulations that took effect on January 1, 2015, the new ship emission control regulations will take effect in northern Europe (including the Baltic sea, north sea and English channel) and North America (200 nautical miles from the coast of the United States and Canada).
The regulation strictly controls the amount of sulfides in ships' fuel emissions, from 1% before 2015 to 0.1%.The regulations on emission control zones are drawn up and adopted by the member states of the international maritime organization (IMO).Emission control zones require carriers to reduce emissions of certain types of substances, such as sulfides (SOx) and nitrides (NOx), as ships navigate this area.
Conventional fuel for shipping is heavy fuel, with sulphur content usually between 1.0 per cent and 3.5 per cent.To qualify for an emissions-control zone of 0.1% sulfur, shipping companies must use different types of higher-purity fuel, which is more expensive.
3. How to quote LSS low sulfur surcharge
Different freight forwarders may have different quotation methods for LSS.
If some freight forwarders are ALL IN price, that is, the cost of LSS has been included IN the shipping fee and will not be listed as a separate cost.Some freight forwarders list the cost of LSS separately.
When making an inquiry, the shipper had better ask whether the LSS cost is included.
4. Is LSS borne by the consignor or the consignee
It is generally believed that the LSS cost does not belong to the local charge at the port of shipment and should be a part of the sea freight. Therefore, it is reasonable for some freight forwarders to include LSS IN the sea freight and quote an ALL IN price.If the goods are FOB designated, the forwarder also charges the shipper LSS fee, which is not reasonable.Since FOB clause does not include freight, LSS as part of freight shall be borne by the consignee.
In the case of C&F or CIF terms, LSS charges should be borne by the shipper.However, for the shipping company, they basically assume that the shipper at the port of shipment prepays this fee.
5. The charging standard of LSS low sulfur surcharge
For shipping companies, in the era of low sulfur, they have to use more low sulfur fuel, and the cost of low sulfur fuel is much higher than the previous conventional fuel. In order to make up for the rising cost, a surcharge of low sulfur will be added to share the increased cost with the shippers.
Different shipping companies charge different LSS fees, and the basic port and transshipment port charge standards are also different.For the base port, it is usually 15-25usd/TEU. For the European base port, some shipping companies charge as follows (the fees may be adjusted for reference only) :
APL：USD20/TEU
NYK：USD25/TEU
OOCL：USD24/TEU
MSC：USD15/TEU
MSK：USD15/TEU
COSCO：USD20/TEU
CMA：USD25/TEU
HANJIN：USD25/TEU
KLINE：USD25/TEU