What does EFF mean in shipping?
Publish Time: 2022-09-05 Origin: Site
EFF: New Environmental Fuel Fee
The Environmental Fuel Fee (EFF) is a surcharge imposed by shipping carriers on cargo owners to offset the increased cost of operating ships on cleaner fuels with lower sulfur content (from 3.5% to 0.5%). Effective December 1, 2019, Maersk will impose a New Environmental Fuel Fee (EFF) on all trades, which will apply to all spot business and contracts valid for no more than three months.
The EFF tariff will be trade-specific and reflect fuel-related cost increases resulting from compliance with IMO 2020 regulations (calculated as the difference in price between high and low sulfur fuels multiplied by a trade factor).
The EFF tariff will only be reviewed in the event of significant fluctuations in fuel prices (over $50/ton).
The EFF tariffs applicable from December 1, 2019 will be announced at the end of October 2019.
With the IMO 2020 regulation mentioned above, a new regulation will come into effect from January 1, 2020 to reduce air pollution from ships worldwide. Today, ships can use fuel with up to 3.5% sulfur (outside of emission control areas) and the new global sulfur cap will be 0.5%.
The cost of complying with the new regulations will be high, and therefore transportation costs will increase.
Therefore along with the EFF there is a cost update namely BAF:Bunker Adjustment Factor.
As previously communicated, the revised Bunker Adjustment Factor (BAF) is designed to adjust the contract price over the term of the contract based on fuel-related cost fluctuations. It applies to contracts that are valid for more than three months.
In 2019, we use the fuel price of high sulfur fuel (3.5% sulfur content) to calculate the BAF. starting January 1, 2020, the BAF tariff will be calculated based on the fuel price of 0.1% sulfur diesel with a fixed deduction of $50/ton.
The conclusion is that the cost is more expensive.
When we look at this chart and see this table, we really only need to focus on the ALL IN price, the previous process can be ignored.