October 9, 2014
The Worldscale Association has announced new bunker prices and fixed rate differentials for 2015, which will help deal with the issue of higher freight costs owing to the upcoming Emission Control Area regulations.
Starting in January 2015 all ships within ECA zones, comprising the Baltic and North Seas and waters off North America, will have to follow new tougher International Convention for the Prevention of Pollution from Ships, or MARPOL, regulations of sulfur content in fuel oil. The new requirement will push the sulfur content limit to 0.1% from the current 1%.
The association said in a circular Wednesday that low sulfur (0.1% sulfur) Baltic and North Sea ECA and European in-port bunker allowances will be $920.75/mt. The allowances in North American and Caribbean ECA zones will be $920.75/mt. The association also said that the bunker prices that will be used for calculating other 2015 Worldscale flat rates will be $614.81/mt. The higher allowances in ECA zones reflect the higher bunker costs for using low sulfur fuels. The association said it will use fixed differentials to calculate additional freight due in connection with voyages involving ECA areas.
“It is the opinion of the joint Management Committees that differentials should continue to be used for this significant item to ensure flexibility where market premiums could differ considerably in 2015 from those given above. In this case it would be possible to update differential values by circular.”
In 2015, the fixed differentials will be based on the use of 0.1% sulfur fuels. The differential in the Baltic and North Sea ECA zone will be $48.35 per mile of the voyage steamed within the zone. In the North American and Caribbean ECA zones the fixed differential will be $65.31 per mile of the voyage steamed within the zone.
Fixed rate differentials are differentials to be included as part of the freight payment as a fixed amount in respect of costs incurred by owners.
Worldscale rates are calculated on the assumption of a round voyage mileage. According to the circular, it is the responsibility of the contracting parties to agree the distance steamed within an ECA. The Worldscale Association said a further notice will be sent out on November 6 outlining all the significant changes between the 2014 and 2015 schedule and rates.