Blog and News

USSA Position Paper

Beverly Altimore - Monday, April 08, 2013

Low Sulfur Charge

One way that the Ocean Carrier segment of the shipping industry tries to keep customers happy with low rates while maintaining their own profitability involves finding new ways to enhance their revenues without asking their customers for a rate increase.  They can sometimes accomplish this by applying surcharges to the base ocean freight rate, which promotes the idea of transparency in rating.  Carriers are recently approaching customers with a new surcharge request - the Low Sulfur Charge (LSC).  Carriers advise that the surcharge is applicable due to mandatory international regulations that Carriers burn low sulfur fuels (LSF) when within a certain distance of specified coast lines.  USSA has studied this issue carefully, and while we agree that there are regulations in place requiring the burning of special fuels, we contend that the Carriers unfairly assess this charge against certain segments of the U.S. shipping trade, which then causes those shippers to pay an unfairly high amount.

The International Maritime Organization (IMO), a United Nations agency concerned with maritime safety, security, and pollution-prevention issues, first adopted standards for pollutants in October 2008.  Those standards can be found in the International Convention on the Prevention of Pollution from Ships (MARPOL) Annex VI.  That document deems certain coastal areas as Emission Control Areas (ECA), which are special protection areas that qualify for more stringent controls on sulphur oxide (SOx) emissions.  Such areas are requested to be so designated by the governing nations and status as an ECA is achieved through a detailed application process. Additional areas will likely be added over time, but the current ECAs include:


Effective date

Baltic Sea

19 May 2006

North Sea

22 November 2007

North America

1 August 2012

U.S. Caribbean

1 January 2014

Once designated as an ECA, MARPOL assists in setting restrictions on the sulphur content of the fuel that is burned within those areas.  That level can and will fluctuate over time, as necessary, to achieve the environmental standards of each area.  Currently, the requirement is that vessels within the ECA must burn fuel with maximum 1% sulphur content.

The area encompassed by an ECA varies depending on the location.  The current restriction covers some 200 miles from the coast of U.S. and Canada, but the Baltic/North Sea area covers everything within certain geographical lines.

Trying to get a fix on the exact cost of LSF to justify the Carriers’ statement that they are burdened with an additional cost to their operations because of international regulations is difficult.  Although several organizations have developed bunker fuel cost tables to comply with the need to track the price of bunker fuels, LSF is still a new requirement and there are neither adequate tracking systems easily available nor are there precise burn rates.  The TSA/WTSA have established a tracking mechanism for the cost of LSF on their website, but keep in mind that this is information provided by an organization supporting the Carrier community and thus is probably not entirely unbiased in their calculations.

The discrepancy with the LSC being requested by Carriers stems from the fact that this charge is not being evenly and fairly assessed across all users.  General cargoes to and from the U.S. are assessed the LSC by tariff quantum (or possibly special contract rates), but certain low-rated commodities aboard the ship do not pay the LSC charge.  Waste paper and forest products, for example, do not pay LSC.  It can be argued by Carriers that the rates for those products already include the LSC, but the rate levels for those commodities have not recently increased by the quantum of the tariff LSC.  

Additionally, the LSC does not appear on trade lanes not touching the U.S., even though they are destined to areas (like the Baltic and North Sea) that do require the use of low-sulphur fuel.  Likewise, importers from Central and South America do not pay the LSC, either, even though the vessels carrying those goods have the same LSF cost factors as vessels coming from Asia and Europe.

These peculiarities in the application of the LSC should give pause to importers and exporters in the U.S. east-west trade lanes, who should be asking their Carriers not only why they need to pay extra to compensate for this special fuel requirement, but also why they are subsidizing other commodity sectors and also subsidizing shippers in other trades that do not pay it.  

An additional cost to the ship operator is a valid reason to pass on that cost to the user.  It is acknowledged that the end user ultimately always pays the cost of doing business.  With that being said, though, all shippers should pay the cost, not just specific categories of shippers that are somehow considered to be ‘less cost-conscious’.  Cargo interests in the U.S. that pay the LSC are apparently subsidizing not only other U.S. shippers, but shippers to/from Central and South America and importers in Europe, as well.  We contend that if the LSC is applicable, it should be applied equally and fairly across all shipping segments, both in the U.S. and in Europe.  If this additional cost was truly applied fairly and equally across all users, the cost of the charge would go down dramatically for every container moved.   Thus, we ask all Carriers to re-evaluate their LSC – if they intend to assess this charge, it should be done on all applicable trade lanes and on all cargoes moving on the vessel.  Doing so will result in a sizeable reduction of the current requested LSC.  A select group of users in one location should not bear the full cost of this regulation for world-wide operations.

m88 commented on 30-Jun-2017 12:53 PM
If you wish for to increase your know-how only keep visiting
this web site and be updated with the most recent news posted here.
M88 commented on 26-Jul-2017 09:35 AM
Hi would you mind letting me know which webhost you're working with?
I've loaded your blog in 3 different browsers and I must say
this blog loads a lot faster then most. Can you suggest a good
hosting provider at a honest price? Thanks, I appreciate it!
M88 commented on 31-Jul-2017 04:13 PM
hello!,I really like your writing so a lot! percentage we keep
in touch more approximately your article on AOL? I need a specialist in this space to unravel my problem.
May be that's you! Having a look forward to see you.
M88 commented on 10-Aug-2017 12:37 PM
Paragraph writing is also a excitement, if you be familiar with after that you can write otherwise it is complicated to write.
m88 commented on 14-Aug-2017 04:13 AM
Terrific article! This is the type of information that are
meant to be shared across the net. Disgrace on Google for no
longer positioning this publish upper! Come on over and
discuss with my web site . Thank you =)
M88 commented on 14-Aug-2017 01:12 PM
You should be a part of a contest for one of the highest quality websites on the web.
I most certainly will recommend this web site! commented on 04-Sep-2017 05:00 PM
We're a group of volunteers and opening a new scheme in our community.
Your site offered us with valuable info to work on. You have done a formidable job and our entire community will
be grateful to you.
Alpha Advance Male Enhancement commented on 09-Sep-2017 02:21 PM
great issues altogether, you siumply gained a new reader. What may you suggest iin regards to your publish that you
made some dawys in the past? Any sure?
cold aisle containment commented on 14-Sep-2017 08:16 PM
Some special facilities are also provided like
showcase movies are also provided.
M88 commented on 19-Sep-2017 11:52 AM
Thanks designed for sharing such a fastidious thought, paragraph is good, thats why i have read it entirely
M88 commented on 19-Sep-2017 11:55 AM
I am really loving the theme/design of your web site.
Do you ever run into any web browser compatibility issues?
A handful of my blog audience have complained about my blog not working correctly in Explorer but looks great
in Opera. Do you have any tips to help fix this problem?
M88 commented on 19-Sep-2017 12:05 PM
Hey! I know this is kind of off topic but I was wondering which blog platform are you using for this website?
I'm getting sick and tired of Wordpress because I've had issues with hackers and I'm looking at options
for another platform. I would be awesome if you could point me
in the direction of a good platform.
M88 commented on 19-Sep-2017 12:09 PM
Touche. Solid arguments. Keep up the good spirit.
M88 commented on 19-Sep-2017 12:36 PM
I relish, lead to I found just what I was looking for.
You have ended my 4 day lengthy hunt! God
Bless you man. Have a nice day. Bye
M88 commented on 19-Sep-2017 07:41 PM
Thank you, I've just been searching for information approximately this topic for a long time and yours is the best I have came upon so far.
But, what in regards to the conclusion? Are you sure about the supply?
M88 commented on 20-Sep-2017 08:00 AM
This paragraph provides clear idea in support of the new
viewers of blogging, that in fact how to
do running a blog.
m88 commented on 20-Sep-2017 09:53 AM
Heya i'm for the first time here. I came across this board
and I find It truly useful & it helped me out much.
I hope to give something back and help others such as you helped
M88 commented on 21-Sep-2017 05:28 AM
It's going to be finish of mine day, but before finish I am reading
this fantastic article to increase my experience.
M88 commented on 21-Sep-2017 07:57 AM
What's up it's me, I am also visiting this site regularly, this web site is
genuinely fastidious and the viewers are really
sharing pleasant thoughts.
M88 commented on 21-Sep-2017 09:49 AM
Thank you for the auspicious writeup. It in fact
was a amusement account it. Look advanced to far added
agreeable from you! However, how can we communicate?
M88 commented on 21-Sep-2017 09:56 AM
An outstanding share! I have just forwarded this onto a co-worker who
was conducting a little research on this. And he in fact ordered me lunch due to
the fact that I stumbled upon it for him... lol. So allow me to reword this....

Thanks for the meal!! But yeah, thanx for spending time to discuss this topic here on your web site.
M88 commented on 21-Sep-2017 11:14 AM
With havin so much written content do you ever run into
any problems of plagorism or copyright violation? My site has a lot of completely unique
content I've either authored myself or outsourced but it seems a lot of it is popping
it up all over the internet without my permission. Do you know any
ways to help prevent content from being stolen? I'd definitely appreciate it.
M88 commented on 22-Sep-2017 09:12 PM
I don't even understand how I stopped up right here, but I assumed this put
up was good. I do not recognise who you're but certainly you're going to a famous blogger in case you
are not already. Cheers!
M88 commented on 24-Sep-2017 10:35 AM
Because the admin of this website is working, no uncertainty very
soon it will be well-known, due to its quality contents.
M88 commented on 24-Sep-2017 09:12 PM
Pretty great post. I simply stumbled upon your weblog and wished to mention that I have truly loved surfing
around your weblog posts. After all I'll be subscribing for your rss feed and
I am hoping you write again very soon!

Post a Comment

Captcha Image

Trackback Link
Post has no trackbacks.

Our Carriers