Advisories
31 May 2024
Decarbonisation Ocean Transport Sustainability
We are pleased to announce the introduction of the Fossil Fuel Fee (FFF). We are making this change as a part of simplifying your logistical moves by streamlining the costs of the different fuel types (mandated by regulations) into a single surcharge, the Fossil Fuel Fee.
What does this mean for customers’ billing?
Currently, there are two types of surcharges connected to fuel for cargo on Ocean: the Bunker Adjustment Factor (BAF) and Low Sulphur Surcharge (LSS). These surcharges relate to the type of fuel that is in use and are in line with regulations related to the individual type of fuel.
The FFF surcharge calculation methodology will replace, in a phased manner, the BAF and LSS.
How is the FFF determined?
The FFF will be reviewed and updated quarterly, using scalable methodology, and will simplify the invoicing structure. Below we have created a chart that explains in further detail the changes:
| CURRENT (BAF & LSS) | FUTURE (FFF) | |
|---|---|---|
| Bunker surcharge to recover 0.5% Sulphur fuel cost? | CURRENT (BAF & LSS) BAF is charged with quarterly review and updates. | FUTURE (FFF) A single surcharge, named Fossil Fuel Fee (FFF), charged with quarterly review and updates. |
| Bunker surcharge to recover 0.1% Sulphur fuel cost? | CURRENT (BAF & LSS) LSS is charged with quarterly review and updates. | FUTURE (FFF) A single surcharge, named Fossil Fuel Fee (FFF), charged with quarterly review and updates. |
| Bunker surcharge to recover any new fuel type mandated by regulations? | CURRENT (BAF & LSS) If regulations are introduced mandating the use of a new fuel type, we would have to pass the cost to customer in the form of a new surcharge/s adding to the complexity. | FUTURE (FFF) A single surcharge, named Fossil Fuel Fee (FFF), charged with quarterly review and updates. |
When will this change take place?
Our goal is to bring ease and connectivity to your logistics. We believe that the simplification to one surcharge related to fuel on ocean will offer multiple benefits.
The FFF Tariff will be available from Q3 2024. In other words, it will be effective from 1 July 2024.
Starting from this date, all new contractual quotes over 3 months' validity will be quoted with FFF.
Pre-existing contracts with BAF and LSS will continue as is until the time of renewal. After this, they will transition to FFF. Therefore, we will continue to publish BAF and LSS tariff rates. This is to avoid any unexpected impact to these pre-existing contracts.
You can find more information on FFF, including the methodology and Terms & Conditions, here.
Questions and Answers on the Fossil Fuel Fee (FFF)
Maersk is streamlining costs of the different fuel types (mandated by regulations) into a single surcharge. The surcharge is called the Fossil Fuel Fee. It is calculated off a weighted sum of the different types of fuel used in a trade. The FFF methodology is designed to ensure a fair/accurate reflection of network efficiency and fuel requirements mandated by regulations.
Currently, there are two types of surcharges connected to fuel for cargo on Ocean: the Bunker Adjustment Factor (BAF) and Low Sulphur Surcharge (LSS). These surcharges relate to the type of fuel that is in use and are in line with regulations related to the individual type of fuel. The FFF surcharge calculation methodology will be phased in to replace the BAF and LSS.
Today, we recover cost of 0.5% sulphur fuel through BAF and 0.1% fuel through LSS. If regulators mandate use of new fuel type, we will have to pass the cost to customer in the form of a new surcharge/s adding to the complexity. FFF will simplify billing by streamlining costs of different fuel types mandated by regulations into a single surcharge. It will simplify the billing for customers.
Starting from 1 July 2024, all new quotes for contracts over 3-month validity will be quoted with FFF.
This means:
- If we quoted a customer on 30 June 2024 for a contract effective on 1 October 2024, then it would be quoted on BAF and LSS.
- If we quoted customer on 1 July 2024 for contract effective on 1 October 2024, then it would be quoted on FFF.
For existing contracts with BAF and LSS, our goal is to minimise any disruptions.
Contracts with a validity of up to one year will continue under BAF AND LSS until renewal. At the time of renewal, these contracts will transition to FFF. For example, if an existing contract is set to expire on 30 June 2025, we will switch it to FFF for the renewed contract starting 1 July 2025.
If we already quoted with BAF and LSS, then we will not transition to FFF. Instead, we will conclude quoting with BAF and LSS. Unless we are quoting for multi-year deal where a decision would be taken in alignment with the customer to transition now or at the time of next rate review/update agreed as per contract.
FFF tariff rates will be emailed to customers contracted on FFF. Please reach out to your Maersk Sales representative if you do not receive it.
BAF and LSS will remain active until 100% of contracts transition to FFF.
Yes, we will continue to publish quarterly BAF and LSS rates, like we do today, until 100% contracts transition to FFF.
This depends on the ECO Delivery product customers opt for.
Customers can visit Maersk ECO Delivery | Low-emissions Shipping | Maersk or contact their Maersk Sales representative to find out more.
For any questions and clarifications, please reach out to your Maersk Sales representative.
