Mediterranean Shipping Company (MSC) will introduce a bunker surcharge as of January 1, 2019 to improve environmental performance while coping with the rising price of fuels.
The company released a statement that reads: “it is essential to segregate transparently the burden of fuel costs, in order for this cost to be passed on visibly throughout the supply chain. Passing on that cost is also vital to ensure the sustainable future of the container shipping industry.”
MSC has estimated that the cost of the various changes being made to its fleet and its fuel supply is in excess of two billion US dollars per year. MSC says it has already had to start incurring these costs to be ready for 2020.
Following analysis of operating costs and related market factors, MSC has established a new price mechanism, the BRC (Bunker Recovery Charge). The BRC will be transparent to respective trades and will reportedly reflect the true additional cost that MSC will incur as a result of the regulatory changes.
For reefer cargo, the BRC will be calculated as BRC x1.5, due to the additional cost of electricity generation used to power reefer containers.
The BRC is currently based on the monthly average of the heavy sulphur fuel oil (HSFO) CST index for each specific trade/service. From Q4, 2019, a monthly average of low sulphur fuel oil (LSFO) index may apply in order to be prepared for January 1, 2020.
The BRC replaces the current Bunker Contribution (BUC), Fuel Adjustment Factor (FAD) and Emergency Fuel Surcharge (EFS), and largely absorbs other pre-existing fuel-related charges. Charges specifically related to coastal Emission Control Areas (ECAs) will remain in place.