As previously communicated, the International Maritime Organization (IMO) is implementing new regulations on January 1, 2020, which further reduce sulfur content requirements of marine fuel from 3.5% to 0.5% for 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.
To ensure compliance with these new regulations, Crowley will begin sourcing 0.5% low sulfur fuel in the applicable international theaters effective November 1, 2019. Therefore, with the mid-August to mid-September 2019 review, Crowley will transition to monitoring the price of compliant 0.5% low sulfur fuel against the current index. These regulatory fuel requirements are expected to result in substantially higher fuel costs.
Crowley has begun using Bunkerworld.com to monitor the average monthly price per metric ton of the current 3.5% sulfur IFO 380 fuel burned in international trades, and will use the same source to subsequently monitor the price of the 0.5% low sulfur fuel. These averages are used in conjunction with the Vessel Fuel Index (VFI), available online here, to determine adjustments in fuel charges.
As of July 15, the average fuel price of 3.5% sulfur IFO 380 over the previous 30 days, remains in the $350-$399 tier, meaning there will be no change in the fuel charge effective September 1, 2019. (Note: 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 will continue to monitor fuel prices over the next month, and make adjustments when necessary.