Low sulfur surcharge FRT

The Low Sulfur Surcharge (FRT) is a fee implemented in response to the International Maritime Organization's (IMO) regulation, effective January 1, 2020, which mandates that ships use fuel with a sulfur content of no more than 0.5%. This regulatory change aims to significantly reduce sulfur oxide emissions from shipping vessels, thereby promoting environmental sustainability and improving air quality. The surcharge is levied by shipping lines to offset the increased costs associated with sourcing and utilizing low-sulfur fuel, which is more expensive than the high-sulfur alternatives previously in widespread use.

Typically, this surcharge is collected by the shipping carriers and paid by the shippers or consignees, depending on the terms of the shipment contract. The Low Sulfur Surcharge is applied on a per-container basis and may vary based on the trade lane, vessel, and market conditions at the time of shipping.

It is critical to distinguish this surcharge from other fuel-related charges, such as the Bunker Adjustment Factor (BAF), which accounts for fluctuations in fuel prices but does not specifically address sulfur content. In practice, logistics professionals should ensure clarity in contracts regarding who is responsible for these costs and consider the surcharge's impact on overall shipping expenses. Moreover, staying informed about any adjustments in the surcharge rate is essential, as these may fluctuate in response to changes in fuel costs or regulatory updates. Understanding the intricacies of the Low Sulfur Surcharge can aid in accurate budgeting and efficient shipping operations, aligning with both environmental compliance and financial planning.