Monday , 21 October 2019
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CMA CGM lays out plans for IMO’s 2020 regulation

CMA CGM Group has opted to use compliant fuels with 0.5% or 0.1% sulphur as its main solution to be compliant with the International Maritime Organisation (IMO)’S 2020 low sulphur regulation.

The group will also use liquid natural gas (LNG) powered vessels and advanced air quality systems onboard its vessels to help with the IMO’s goal of having all sea-going vessels worldwide to reduce their sulphur emissions by 85%.

Due to IMO’s low sulphur regulation, effective January 1, 2020, shipping costs are set to increase worldwide and CMA CGM is also due to implement a new price reference for its short-term and long-term contracts.

The new price reference has been put in place as Very Low Sulphur Fuel Oil (VLSFO) is anticipated to be significantly higher than the present High Sulphur Fuel Oil (HSFO).

For short-term contracts of validity three months or shorter a new monthly low sulphur surcharge will be applied on top of the shipping line’s ocean freight charges and is effective from December 1, 2019.

On the other hand, for long-term contracts of more than three months’ validity, VLSFO will replace HSFO as the price reference for CMA CGM’s quarterly Bunker Adjustment Factor (BAF) effective January 1, 2020.

The BAF is applied on top of the ocean freight charges and will still be revised on a quarterly basis with a one-month notice.

For reefer cargo, the BAF quantum will be 20% higher than that of dry cargo for the same container size with a minimum of US$25 per teu.