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.
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 later this year. 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 June 15, the average fuel price of 3.5% sulfur IFO 380 over the previous 30 days, changed to the $350-$399 tier, meaning there will be a reduction in the fuel charge effective August 1, 2019 as per the table below. (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.