Crowley Fuel Index: IMO2020
Due to rising fuel costs, vessel fuel charge for our international services will be adjusted effective April 1, 2019. The adjustments will be applicable on all shipments (tariff and contract) to/from the U.S. and San Juan, PR to/from the following countries: Costa Rica, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Anguilla, Antigua, Aruba, Barbados, Bonaire, Curacao, Cuba, Cayman, Grenada, Guyana, Jamaica, Montserrat, Nevis, Saba, St Barth’s, St Croix, St Eustatius, St John US VI, St Kitts, St Maarten, St Thomas, St Vincent, Suriname, Tortola, Trinidad, Virgin Gorda. (The fuel increases below do not apply on shipments between the U.S. and Puerto Rico, which are governed by a separate index.)
Further, on January 1, 2020 the International Maritime Organization (IMO) is implementing new regulations which further reduce sulfur content in fuel from 3.5% to 0.5% aboard vessels operating outside of designated Emission Control Areas (ECAs). Within the North American, Puerto Rico & USVI Emission Control Areas (ECAs), sulfur content will remain at 0.1% as was previous established on January 1, 2015. Additional information regarding these regulations can be found on the IMO website.
In compliance with these new regulations, Crowley will convert to using the new 0.5% low sulfur fuel in the applicable international theaters as required. These regulatory fuel requirements are expected to result in substantially higher fuel costs.
To begin, Crowley will use Bunkerworld.com to monitor the average monthly price per metric ton of the current 3.5% sulfur IFO 380 fuel burned in these international trades today, and subsequently, the price of the 0.5% low sulfur fuel. Those averages will then be used in conjunction with the Vessel Fuel Index (VFI) table below, to determine adjustments in fuel charges. Any adjustments, if necessary, will be made with at least 30 days’ notice and be effective on the 1st day of the following month. All new Contract and Tariff rates effective April 1, 2019 will utilize this new Vessel Fuel Index (VFI). Existing Contracts will be converted to the new VFI throughout the course of the year. (Again, this index WILL NOT apply on shipments between the U.S. and Puerto Rico, where a separate Puerto Rico Vessel Fuel Index is currently in effect).
We anticipate the additional cost of purchasing 0.5% low sulfur fuel will need to be realized ahead of the January 2020 implementation date so to have the correct fuels onboard vessels to be in compliance with the January 1 regulations. Therefore, later this year, we will apply the cost of 0.5% low sulfur fuel utilizing the same Vessel Fuel Index (VFI) below to determine any changes.