LSF (Low Sulphur Fuel Surcharge)

The Low Sulphur Fuel Surcharge (LSF) is a surcharge levied in international shipping to cover the cost of vessels using low-sulphur fuel. Since the International Maritime Organization (IMO) implemented the global sulphur cap in 2020 (requiring marine fuel sulphur content ≤0.5% m/m), shipping companies have had to switch to low-sulphur fuel or install scrubbers, leading to increased operating costs. Therefore, they charge cargo owners an LSF to offset the price difference. This fee is usually independent of ocean freight and is charged per container or per freight ton, commonly seen on routes to Europe/Mediterranean, US/Canada, and Asia. Usage scenario: When calculating logistics costs, exporters need to consider LSF together with basic ocean freight, Bunker Adjustment Factor (BAF), Currency Adjustment Factor (CAF), etc. Notes: LSF is not fixed; it fluctuates with the market price of low-sulphur fuel, and standards vary greatly among different shipping companies and routes. It differs from the traditional BAF in that BAF corresponds to high-sulphur fuel costs, while LSF specifically addresses the additional cost of low-sulphur fuel. Additionally, some shipping companies may include LSF in an all-in rate, so it is necessary to carefully check the quotation details to avoid double payment. Foreign trade practitioners should specify the party responsible for LSF in contracts, pay attention to shipping company notices, and update quotations promptly.