NEW SULPHUR CAP The IMO 2020 Fuel Regulation: Update for ZIM Customers 1
What is the IMO 2020 Fuel Re Regulation? ▪ The new fuel regulation, known as “the Sulphur Cap”, require all carriers to use low sulfur fuel (up to 0.5% sulfur content) by January 1st, 2020 ▪ The new regulation, introduced by the International Maritime Organization (IMO) is aimed at reducing marine pollution and emissions ▪ All shipping companies will be obliged to comply and to significantly reduce emissions on the high seas and in coastal areas 2
How will the Re Regulation Impact the Shipping Industry? ▪ The new regulation will impact all the stakeholders in the industry. Co Compliance with the new re regulation is is curr rrently expected to to create a significant cost impact. ▪ There are three ways for carriers to comply: ▪ Buying compliant fuel at higher prices ▪ Installing new cleaning systems on board vessels ▪ Deploying new type of vessels using Natural Gas (LNG) All alternatives are expected to carry significant costs for carriers 3
What is ZIM’s Policy Re Regarding the New Re Regulation? ▪ ZIM fully supports the new regulation, which will contribute to the state of our oceans and the environment. This is part of ZIM’s vision and policy ▪ ZIM is well prepared to meet the new requirements, either by purchasing compliant fuel or by Installing new cleaning systems on board vessels ▪ ZIM will implement a New Bunker Factor (NBF) to compensate for changes in the fuel prices ▪ The New Bunker Factor (NBF) will be charged separately from the basic Ocean Freight 4
How Do We Calculate the NBF? In order to assist our customers to plan ahead and prepare for the expected changes, ZIM is introducing a simple formula, to enable a general and convenient calculation of the changed tariffs. The form rmula ula is is ba based sed on on a th thorough ugh analysis ysis of of operatin ting cost sts and market et factors The trade factor reflects the average fuel consumption per carried TEU on a round-voyage basis, while taking into account the imbalance of the trade For Reefer containers, the NBF will be calculated as NBFx1.5, due to the additional costs related to reefer cargo 5
When Do Do We We Start, and and How Will it it Work? ▪ The NBF will be introduced on February 15 th ,2019. There may be later implementation dates in trades where regulatory approvals are required * . ▪ The bunker formulas in contracts that are already signed and are valid after February 15th, 2019, shall remain valid till termination of the contracts. However, commencing from fourth quarter of 2019 or the date in which the company starts using the LSF (whichever is earlier), the fuel price element of the formula in such contracts will be based on the Low Sulphur fuel. * Trades subject to the US shipping act or the China Maritime Regulations, etc. 6
How do do we we Update the NBF? ▪ NBF will be based on the monthly average fuel price for high Sulphur fuel (IFO380) till Low Sulphur fuel (LSF) comes into effect ** ▪ The NBF update frequency will be quarterly, with a monthly review ▪ The quarterly update will be done only for a fuel price change of over $10/Ton ▪ The monthly update trigger will be a fuel price change of over $40/Ton ▪ The quarterly/monthly review and update will be compared to the last fuel price used in the last NBF update ** shall start from Q4 2019 or the date in which it will be required to start using LSF, whichever comes first 7
Thank You! 8
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