Customer Advisory on the new 2020 fuel regulation

Dear ZIM customer,

As previously communicated by ZIM, on January 1^st, 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 ZIM's 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 15^th, 2019, ZIM 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:

 

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 Intra Americas trade the NBF will be calculated based on the changes in the fuel price 

Moving to low Sulphur fuel

Since February 15^th, 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, ZIM will start bunkering the vessels with 0.5% low Sulphur fuel during the 4^th quarter of 2019.

Therefore, commencing from December 1st, 2019, the NBF tariff will be based on compliant low-Sulphur Fuel.

 
Compliant Low Sulphur Index

ZIM’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, ZIM will use the 0.1% gasoil index minus a fixed deduction of $50/Ton. ZIM plans to move to the 0.5% Sulphur fuel index once such Index stabilizes.

The NBF tariffs applicable from December 1^st, 2019 will be announced by the end of October 2019.

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

 

Thank you for your cooperation and continued support.