From January 1st 2020 the IMO (International Maritime Organisation) will be enforcing a new global cap on Sulphur usage.
These new changes are set to have a major impact on the shipping industry and will mean that shipping lines will have to use marine fuels with a sulphur content of no more than 0.5% against the current limit of 3.5% in an effort to reduce greenhouse gas emissions.
Although this regulation change will not come into effect until January 1st 2020 we are going to be seeing the impact of this throughout 2019 as the shipping lines make preparations. Some of the main ways shipping lines will look to reduce their sulphur content are by;
• A new blend of fuels could be used to create a new fuel that would meet the sulphur requirements.
• Ships could be fitted with engines that can use different types of fuels like liquefied natural gas, or biofuels.
• Installing an exhaust gas cleaning system (known as a scrubbers) – The scrubbers are designed to remove the sulphur oxides from the ship’s engine and boiler exhaust gases. This means that the shipping line can continue using higher sulphur fuels.
The above options will all result in increased costs for the shipping lines with no exception. These new regulations come into force as of the 1st January 2020 with heavy penalties for the shipping lines should they not be adhered to.
The consequence of the IMO 2020 will inevitably see an increase in freight rates to cover the shipping line costs.IMO 2020 will also see slower transit times worldwide and potentially more transhipments due to the need for refuelling. Port rotations will also be likely to try to alleviate the slower transit times.
Shipping lines are already looking to change rotations now which is consequently impacting water transits.In preparation for the impending regulation changes, shipping lines have already begun implementing surcharges to cover the initial costs.
We fully expect to see this trend continue throughout 2019. In order to try and mitigate these charges for our customers, we will continue to look at all available options to ensure the most competitive services are used.
Should you have any questions regarding this please do not hesitate to contact us at [email protected]