New Bunker Factor (NBF)

Oct 11th, 2019

 

Dear GSL customer,

As previously communicated by GSL, on January1st,2020, the new fuel regulation, known as “2020 Sulphur Cap”, will come into force. The regulation is part of several international initiatives aimed at reducing marine pollution and emissions, which is also supported by GSL environmental policy.

The 2020 Sulphur Cap requires all marine carriers to use low Sulphur fuel (up to 0.5% Sulphur content) in lieu of the current limit of 3.5%outside Emission Control Areas.

Compliance with the regulation will create a significant cost impact on carriers, and as a result will increase the cost of shipping.

New Bunker Factor (NBF)

On February 15th, 2019, GSL has implemented the New Bunker Factor (NBF) to compensate for the additional costs attributed by the increase in fuel price. The NBF is charged separately from the basic ocean freight.

The NBF is calculated as indicated below:

*Fuel Price per Ton X Trade factor = New Bunker Factor (NBF)

The Fuel price used in the above formula is the average fuel price in the major bunkering ports in a given trade, and the “Trade Factor” reflects the average fuel consumption per carried TEU on round voyage basis, while taking into account the imbalance of the trade.

*In the North East Asia to South East Asia (Pure Intra Asia) trade the NBF will be calculated based on the changes in the fuel price.

Moving to low Sulphur fuel

Since February 15th, 2019, the NBF tariff was calculated based on the high Sulphur fuel price (3.5% Sulphur).

In order to be ready to meet the new regulation implementation date, GSL will start bunkering the vessels with0.5%low Sulphur fuel during the 4th quarter of 2019.

Therefore, commencing from December1st,2019, for all GSL trades except Intra Asia Trade (North East Asia to South East Asia) the NBF tariff will be based on compliant low-Sulphur Fuel.

In Intra Asia Trade (North East Asia to South East Asia), the NBF adjustment to low-Sulphur Fuel will commence as from 1stof Nov 2019.

Compliant Low Sulphur Index

GSL’s original intention was to use the 0.5% Sulphur price index for the NBF calculation.  However, due to the absence of a clear and stable 0.5% low Sulphur Index, GSL will use the 0.1% gasoil index minus a fixed deduction of $50/Ton. GSL plans to move to the 0.5%Sulphur fuel index once such Index stabilizes.

The NBF tariffs applicable from December 1st,2019 will be announced by the endofOctober2019.

The NBF tariff applicable for the Intra Asia Trade will be announced on1stweek of October.

Please contact your local GSL representative for any questions you have.

 

 

Thank you for your cooperation and continued support.

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