IMO 2020: Understanding the Impact of Cutting Sulphur Oxide Emissions
As global shippers prepare for the busy season approaching, the International Maritime Organization (IMO) has a new international regulation scheduled to begin the first of January. IMO 2020 is a regulation designed to reduce Sulphur oxide emissions from ships, which will reduce the harmful impact of the shipping industry’s byproduct fuel emissions. Lower sulfur emissions will improve air quality in port cities as well as lessen ocean acidification. With roughly four months remaining before the regulation is implemented, trans-ocean logistics companies are urging vessel owners to plan accordingly so they are not fined for surpassing the Sulphur limit specifications.
The IMO 2020 regulation applies to all ships on international and domestic voyages. New IMO compliant fuels are being created, but due to limited supply and high demand, the price of the new fuel is expected to fluctuate. These additional costs can create a trickle-down effect, which has the potential to affect both vessel owners and shippers. Shippers will most likely find the cost of ocean transportation increasing as the marine sector must utilize these more costly fuels.
RTM Lines a respected trans-ocean transportation company providing, knowledgeable, cost-effective and professional expertise in the ocean transportation industry is committed to assisting our clients to navigate these changes. The new IMO 2020 regulation will affect the entire industry including a variety of vessel operators by reducing acceptable fuel sulfur content from 3.5% to 0.5%. “Even the smallest amount of Sulphur will subject vessels to a fine or the ship will be pulled out of trade,” said Richard Tiebel, Head of Operations at RTM Lines. “The more proactive vessel owners are about reducing the amount of Sulphur there is in the fuel, the fewer problems they will have to deal with when the IMO 2020 regulations are in effect.”
“Fuel treatment remains the most effective way to address compliance. However, fuel treatment is in short supply, so we will likely see higher costs for this service, ultimately coming out of the consumer’s pocket. Another solution is flushing of the tanks; this is costly in more ways than one as it has the potential to put a vessel out of commission for a significant amount of time. When weighing their options, shippers should consider capacity, as non-compliant vessels will be pulled out of service or denied entry at certain ports.” Tiebel said.
Freight costs are already showing signs of an unpredictable landscape. Tiebel shared that, “A $20 difference between IFO 380 bunker and marine gas oil, adds an additional $2.50 per freight ton to breakbulk shipments on a booking note basis. Current and future bunker prices will be based on web-based bunker platform reports which will be provided along with the freight invoice.” In other words, shippers are starting to see an added invoice to charges previously quoted simply due to fuel changes. Furthermore, these charges are covered with right to adjust at time of quotation, time of loading, and at time of discharge.”
Although the IMO 2020 regulation, has the potential to be more expensive, it can drastically reduce pollution in the environment. The move beyond traditional shipping fuels will transform the ocean shipping industry. These changes in the industry, though challenging, can make a significantly reduction in emissions and create a positive impact on the environment.
“I believe once IMO 2020 is implemented, it’s going to help the environment tremendously. Compliance will be a big step in bringing our industry up to date in protecting the marine environment we utilize. It is the key ingredient not only in ocean transport but in our lives and those of our families.” Tiebel concludes.