In November, Taiwan’s Ministry of Transportation and Communications issued new guidance advising that, from 1 January 2019, vessels entering certain ports in Taiwan would be required to comply with the IMO’s 2020 global regulation that caps fuel sulphur content at 0.5%. This is a full year earlier than the IMO’s deadline, which some shipowners are already struggling to meet.

The ports enforcing this new regulation include Keelung, Taichung, Kaohsiung, Hualien, Taipei, Suao, and Anping.

To date, the implementation of surcharges by shippers to cover this new operating cost is still unfolding, and there is, so far, no standard practice among regulatory authorities on price transparency in such events.

Speaking to Forward with Toll, Sunny Ho from Hong Kong Shippers Council, shared some insight into the short-term pricing impact, “Many shippers still have their service contracts in effect, which might not allow new charges.” He continues, “The Council’s basic position regarding surcharge is that surcharge should be allowed only when a substantial and unforeseen situation comes up.”

Ho explained the Hong Kong Shippers Council believes that, when the industry is in a ‘business as usual’ state, “this surcharge should be incorporated into freight, which is to be negotiated between shippers and shipping lines in an open market manner.All surcharges, therefore, should be temporary in nature. Shipping lines should obtain their revenue through freight, not surcharges. There should also be a mechanism to ensure sufficient transparency in the industry.”

This early implementation has also applied to other Greater China ports, including Yangtze in China. HuataiI nsurance Agency & Consultant Service Ltd. shared an update from Chinese authorities stating that as of 1 October 2018, ships must burn fuel with sulphur content not exceeding 0.5% when operating inside the Yangtze River Delta ECA.          

Low sulphur fuels have already been implemented at many ports in North America and Europe. Many shippers are unhappy that when bunker costs rise they have to pay a surcharge, arguing that fuel is a basic operating cost for all carriers and as such should be included in the basic freight fee.