FRT Low sulfur surcharge
Fuel & EnergyKey Information
What is 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.
Frequently Asked Questions
The Low Sulfur Surcharge (FRT) is a fee implemented by shipping carriers to comply with the International Maritime Organization's regulation limiting sulfur content in fuel to 0.5%, effective January 1, 2020. This charge helps offset the higher costs of sourcing low-sulfur fuel, which reduces sulfur oxide emissions and promotes environmental sustainability.
The Low Sulfur Surcharge (FRT) fee is charged by shipping carriers and is typically paid by the shipper or consignee. This fee helps carriers manage the increased expenses associated with using low-sulfur fuel, aligning with environmental regulations set by the International Maritime Organization.
The Low Sulfur Surcharge (FRT) is calculated on a per-container basis. The specific amount can vary depending on the shipping carrier, route, and current fuel prices. It reflects the additional costs of using low-sulfur fuel to meet international emission standards set by the International Maritime Organization.
Avoiding the Low Sulfur Surcharge (FRT) is challenging since it's a mandatory fee imposed by shipping carriers to comply with international regulations. However, shippers might minimize costs by consolidating shipments or negotiating terms with carriers. Planning shipments efficiently can also help manage overall logistics expenses.