The low-sulfur surcharge has been in the past four years since the beginning of the collection. Many consignors and consignees have gradually accepted this fee.
Most freight forwarders will include this surcharge in the offer when the sea freight is quoted. The last round rise of the low-sulfur surcharge did not set off too much turmoil because the average low-sulphur surcharge was charged at a 20GP: around 25 USD and a 40HQ was charged at around 45 USD.
However, the cost of this round of low-sulfur surcharges, which will be implemented on January 1, 2020, will be greatly increased. The increase in surcharges will be more than 50-350USD/container.
Next, let us have a deep interpretation of the low-sulfur surcharge so that we can better guide the meaning of the low-sulfur surcharge, the origin, how to quote, payee, and the charging standard.
What is a low sulfur surcharge?
The full English name of LSS is Low Sulphur Fuel Surcharge or Low Sulphur Surcharge, which means “low sulfur surcharge”, which is one of the main shipping surcharges. It is a relatively new fee that started in 2015.
The origin of LSS
According to the environmental protection regulations that came into force on January 1, 2015, the new ship emission control regulations will come into force in northern Europe (including the Baltic Sea, the North Sea, and the English Channel) and North America (200 nautical miles from the US and Canada coast).
This regulation strictly controls the number of sulfides in ship fuel emissions, from 1% before 2015 to 0.1%. Regulations on emission control zones are prepared and adopted by the member states of the International Maritime Organization (IMO).
Emission control areas require carriers to reduce emissions of certain types of substances, such as sulfides and nitrides, as the ship sails to this area.
The conventional fuel in shipping is heavy fuel oil, and the sulfur content is usually between 1.0% and 3.5%.
To meet the requirements of an emission control zone with a sulfur content of 0.1%, shipping companies must use different types of higher purity fuels and install equipment that reduces sulfur emissions because the cost of sea freight becomes more expensive.
Therefore, the low sulfur fuel surcharge= LSS (LOW SULPHUR SURCHARGE or LOW SULPHUR FUEL SURCHARGE, also referred to as LSF, GFS, LSD) came into being.
Since January 1, 2015, ships passing through the ECA of the Baltic Sea and the North Sea, that is, European shipping companies, have begun to collect LSS. The price reported to the importer or the freight forwarder will often include the sea freight.
At the same time, China has also paid more attention to environmental protection issues.
The transportation and maritime departments have successively drawn out the waters of the Bohai Sea, the Yangtze River Delta, and the Pearl River Delta Water and Waters.
On this basis, the geographical coverage of control will be extended to 12 nautical miles and Hainan waters along the coast of the country, and the emission control zone will be extended to inland rivers, including inland navigational waters of the cities above the coastal level and the navigational waters of the Yangtze River.
From the requirements of the control area, starting from January 1, 2019, ships sailing and docking in the coastal control area should use marine fuel oil with a sulfur content of 0.5% m/m or less; from January 1, 2020, the ship Marine fuel oil with a sulfur content of 0.5% m/m or less shall be used for navigation in coastal control areas, and marine fuel oil with a sulfur content of 0.1% m/m or less shall be used for parking.
The sulphur content should not exceed 0.1% in navigation and docking in Hainan waters.
(ecotourism island, the standard is naturally higher!).
Applicable objects include vessels that are navigating, berthing, and operating in the emission control zone, with the exception of military vessels, fishing vessels, and competitive sports vessels.
According to this requirement, the shipping companies that are in the waters of the Yangtze River Delta, including the ports of Shanghai, Ningbo and the Yangtze River, will take the lead in levying LSS on November 1, 2018:
As of December 4, 2018, the LSS fee standards collected by various shipping companies are summarized. The following form specifies different charging standards according to different routes.
However, starting in 2019, various shipping companies began to collect goods from Dalian, Tianjin, Yantai, Qingdao and the Pearl River Delta’s Shenzhen, Guangzhou, Xiamen and other ports, and began to collect LSS simultaneously.
This means that as of October 2019, the shipping company that collects LSS contains almost all the shipping companies currently operating. The list is as follows:
COSCO, WHL, ZIM, SITC, NZL, SNL, YML, KMTC, RCL, OOCL, CNC, HMM, SML, ASL, IAL, PIL, TSL, APL, SKR, BSL, CK, EAS, PAN, BEN, PERMA, UCL, NOS, HAL, ONE
Different shipping companies charge different LSS surcharges for different routes.
How to quote LSS surcharge?
Different freight forwarders may have different pricing methods for LSS.
If the freight forwarding quotation is ALL IN, the LSS fee is already included in the sea freight and is no longer listed as a separate fee. Some freight forwarders list the LSS fees separately.
The importer should ask at the time of the inquiry whether the sea freight includes the LSS fee or not.
LSS fees can be prepaid, but you can also choose to be collected.
Is the LSS undertaken by the consignor or the consignee?
It is generally considered that the LSS fee does not belong to the local charge of the port of departure and should be an integral part of the sea freight.
Therefore, it is reasonable for some freight forwarders to include LSS in the sea freight to report an ALL IN price.
If the FOB designated shipment.if the freight forwarder also charges the shipper for the LSS fee, which is unreasonable.
Because the FOB terms do not include shipping charges, the LSS that is part of the freight should be borne by the consignee.
In the case of C&F or CIF terms, the LSS fee should be borne by the shipper. But for the shipping company, they basically default to the shipping port prepaid this fee.
how much the carrier will charge on low sulfur surcharge fee
Charges for various shipping companies from 2015 to October 2019:
For shipping companies, in the low-sulfur era, they have to use more low-sulfur fuels. The cost of low-sulfur fuels is much higher than that of conventional fuels. In order to make up for this rising cost, additional low-sulfur surcharges will be added to increase the cost is shared with the owner.
The LSS fees charged by each shipping company are different, and the basic port and transshipment port charges are different.
For the basic port, it is usually 15-25usd/TEU. For example, the basic port of Europe, some shipping companies charge as follows (the fee may be adjusted for reference only):
CMA CGM: USD25/TEU
However, starting with the latest low-sulfur surcharge effective policy starting from October，2019, the charging standards are greatly adjusted, and the notification and fee standards are updated as follows:
From November 1st,2019. including South China, almost all of China’s national shipping ports will be covered. Each shipping company will levy low-sulfur fuel surcharges (LSS) for all freight forwarders and cargo owners. Almost all shipping companies have already issued levies. Notice.
In the end, these expenses will definitely be passed on to the freight forwarder. On the cargo owner, the owner will add another fee!
The following are the specific notices for the collection of low-sulfur fuel surcharges and some other fees from major shipping companies since November:
For the export of Shanghai (including the Yangtze River), the shipment of Southeast Asian goods (excluding the Taiwan line) is subject to a low-sulfur fuel surcharge at the rate of USD20/40/40 per 20’GP/40’GP/40’HQ. Hong Kong prepaid, effective date: November 8, 2018.
Export: 20 US dollars / TEU, effective date November 9 (starting port), default prepaid; import: 20 US dollars / TEU, effective date November 1 (starting port), default to pay.
All import and export routes are levied except North America and Taiwan. Expropriation area: Shanghai, Ningbo, Yangtze River Delta, and Branch line.
Since November 9th, the goods covered by the Shanghai, Ningbo and Yangtze River branch exports, LSS costs increased by 20 to 45 US dollars.
Since November 10, low Sulphur Surcharge ($25/$50) has been charged for all Southeast Asian exports.
Sinotrans Container Lines
Except for the Taiwan route, all other goods imported and exported through Shanghai are subject to a low sulfur oil surcharge.
Export: $15/TEU, levied from November 21;
Import: 100 yuan / TEU, collected from December 1.
The first stage:
Export: US$15/TEU, implemented from November 1st, except Taiwan, Japan, Australia;
Import: 100 yuan / TEU, implemented since November 1, except Taiwan and Japan.
Since November 22, Shanghai-Japan has imposed $15/TEU;
Since December 1, Japan-Shanghai has levied 100 yuan/TEU.
CLS Low Sulfur Surcharge：
- Southeast Asia + India + Pakistan + Yangtze River Port: 100/200 RMB / TUE, starting from November 16;
- Middle East Red Sea + Yangtze River Port: 100/200 RMB/TUE, special box 150/300 RMB/TUE, starting from November 6;
- Mediterranean North Africa + Yangtze River Port: 80/160 RMB/TUE, starting from November 9;
- Japan + Yangtze River Port: 15/30 USD/TUE, starting from November 22;
- Africa and South America are pending.
From November 1st, a low sulfur oil surcharge of 20/40 US dollars (TEU/FEU) will be charged, the export will be borne by the consignor and the import will be borne by the consignee.
The export is based on the actual date of shipment and the import is based on the actual date of arrival.
From November 1st, a low sulfur oil surcharge of $15/TEU, $30/FEU will be charged.
Since October 30, the low-sulfur oil surcharge is 120 yuan/TEU, 240 yuan/FEU.
Since November 11, the ANZ line has a low sulfur oil surcharge of RMB 100/TEU, RMB 200/FEU, calculated on the actual shipping date. South China is as follows:
The implementation of the new IMO 2020 will result in an increase in the average cost per container by $160. This additional cost will be apportioned by levying or adjusting fuel surcharges based on trade routes.