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Friday, 6 December 2019

Incoterms 2020 coming into force January 2020

The International Chamber of Commerce has made changes to Incoterms to bring them more into line with modern world trade and shipping.

Incoterms are essential for international shippers and consignees to understand and agree responsibilities for shipping arrangements, costs and liability.

The main changes flowing through into Incoterms 2020 are as follows:
  • Incoterms® 2020 provides for demonstrated market need in relation to bills of lading (BL) with an on-board notation and the Free Carrier (FCA) Incoterms® rule.
  • Incoterms® 2020 aligns different levels of insurance coverage in Cost Insurance and Freight (CIF) and Carriage and Insurance Paid To (CIP).
  • Incoterms® 2020 includes arrangements for carriage with own means of transport in FCA, Delivered at Place (DAP), Delivered at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
  • There is a change in the three-letter name for Delivered at Terminal (DAT) to DPU.
  • Incoterms® 2020 includes security-related requirements within carriage obligations and costs.
If you would like more information please contact myself or my team at Depth Logistics.

All for now,

Brad Skelton

Monday, 2 December 2019

IMO Low Sulphur Regulation Compliance & Freight Increases 1 January 2020

Effective from January 1st, the new IMO (International Maritime Organization) 2020 Low Sulphur Regulation will come into force, requiring all sea-going vessels to comply and reduce sulphur emissions by 85%.

In order to sufficiently comply with the Regulation, sulphur in fuel oil must be reduced from 3.50% to 0.50% in addition to the 0.10% sulphur limit already enforced in Emission Control Areas (ECA).

The objective of this regulation is to reduce the amount of sulphur oxide emissions which is expected to deliver major health and environmental benefits, including improvement of air quality and reducing risks of acidification in the oceans.



Ship owners are responding to this and seeking their compliance with some or all of the following solutions:

- Using liquid natural gas-powered (LNG) vessels

- Installing IMO approved exhaust gas cleaning systems(scrubbers)

- Using compliant fuels with 0.50% or 0.10% sulphur as the main solution

The new IMO 2020 Low Sulphur Regulation is impacting the shipping industry globally, with shipping costs set to increase worldwide. The cost of the Very Low Sulphur Fuel Oil (VLSFO) is expected to be significantly higher than the present High Sulphur Fuel Oil (HSFO).

Projections are that the VLSFO price will be at about US $531/mt in Rotterdam as compared to US $309/mt for HSFO. This equates to a 72% increase in fuel costs.

As a consequence carriers are introducing various sulphur surcharges to recover their higher operational costs. Most are using the BAF (Bunker Adjustment Factor) as the primary mechanism to pass these costs onto shippers.

For RoRo carriers we are seeing Sulphur Recovery Charges from USD 0.23 to USD 35.00 per revenue tonne plus BAF between USD 5.50 to USD 13.00 per revenue tonne.

Container carriers have surcharges per TEU (Twenty foot Equivalent Unit) ranging from USD 60.00 to USD 260.00 depending on the trade lanes concerned and the vessels serving them.

Please feel free to contact me if you would like some specific advice about your own circumstances and shipping contracts.

All for now,

Brad Skelton