In terms of transportation costs, sea freight is a cost-effective choice. However, be aware of any additional fees, such as additional fees charged for forwarding services. They have been used in marine and air transport. One of which has been applied for many years in ocean freight is LSF, also known as LSS or GFS. Let's find out about this fee with Giaiphapdonggoi.net!
1. What is the LSS fee?
What is LSS fee?
LSS is an abbreviation of the first letters of the English term “Low Sulfur Surcharge”, which means surcharge for low sulfur fuel. Behind the similar concept are LSF (Low Sulfur Fuel Surcharge) and other shortcuts given by different shipping lines. According to the revised Marpol International Maritime Organization Convention for the Prevention of Pollution from Ships, in certain areas the amount of sulfur and its compounds (SOx) should not exceed a certain level. . Since 2010, the sulfur content of the fuel should not be more than 1%, and since 2015 this value has been changed to 0.1%. Starting in 2020, the maximum sulfur content is 0.5%. These regulations apply to the ECA (Emissions Control Area), which includes the Baltic Sea, the North Sea, as well as the exclusive economic zones of the United States and Canada.
2. What does this mean for ship owners?
The Convention requires adaptation of goods to new operating conditions. In other words, you should use a desulfurization fuel that meets the requirements set forth by the Organization. However, this type of fuel is more financially burdensome for ship owners, as it is even four times more expensive than the high-sulfur grade. Another option is to switch to natural gas; however, modernizing ships to accommodate liquefied natural gas energy harvesting is costly and underdeveloped. Failure to meet the regulations may result in liability and consequences.
3. Why was the LSF/LSS fee introduced?
It has been tested and proven that sulfur is harmful to the environment. By burning and processing minerals that also contain sulfur, excessive amounts of sulfur dioxide (SO2) are released into the atmosphere, which is then converted into sulfuric acid. Although sulfur is necessary for the functioning of life forms, exposure to sulfur precipitation - acid rain - leads organisms to develop inflammation. SO2 by way of smelly smoke, from a concentration of 1 g/m3 of air, is very dangerous to health. So what counts is the amount of sulfur, not its occurrence. The higher the sulfur concentration in the fuel, the more harmful it is. The purpose of the LSS fee is to partially offset the operating costs of the lighter, more expensive fuel. Its amount ranges between $35 and $370 and is volatile, but it depends on the shipowner and the route.
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For both shipowners and forwarders, this regulation is associated with higher operating costs. This increase can be transferred to the consumer by increasing the price of goods transported. Reducing sulfur emissions will slow global warming and improve air quality. However, spending money doesn't seem like too much of a price if the stakes are further life on this planet, where the environmental balance has been destabilized by human actions.
LSS fee from 01/01/2020
From 1 January 2020, IMO requires a reduction in sulfur emissions of cargo ships by 0.50% m/m (the old level of 3.5% – which is more than 85% reduction from the regulated level applied since 2012). ). Therefore, from the beginning of 2020, LSS fees for import and export ports have increased, affecting the costs of many businesses. However, this is an increase with good reason.
4. Who pays LSS fee?
It is generally believed that the cost of LSS is not part of the local charge at the port of shipment and should be part of the sea freight. Therefore, it is reasonable for some forwarders to include LSS IN in sea freight and quote ALL IN. If the goods are designated FOB, the forwarder also charges the shipper's LSS, which is unreasonable. The freight, LSS as part of the freight will be borne by the consignee.
In the case of C&F or CIF terms, the shipper has to bear the LSS fee, however, for the shipping line, it is essentially assumed that the shipper at the port of shipment pays this fee in advance.
Above is some information about LSS fees that Giaiphapdonggoi.net provides you. Hope to help you better understand the information about LSS fees. Good luck!
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