Since we previously informed about the new IMO 2020 regulation, with a probable cost increase for ocean freight, and while some details are still unknown, we would like to give a brief update and explanation of the issue.
Marine traffic is one of the main contributors to global sulphur pollution. In order to reduce the environmental burden caused by this, the IMO (International Maritime Organization) will require all shipping lines to reduce Sulphur emissions.
Currently, a cap of 3.5 % sulphur content in fuel is in place, and this will be reduced to 0.5 % as of January 2020.
Carriers are able to meet the new demands via two options, either use the new regulated fuel with less Sulphur, which is more expensive than current fuel, or to install special equipment (“scrubbers”) in their vessels – at a cost of several million USD per vessel. Industry experts estimate the total additional annual cost to the industry to be in the range between $13 and $15.7 billion dollar.
Carriers going for the new fuel will start using this end of November/beginning December and installations of Scrubbers have been performed since some time back, and will continue even after 1st of January. Shipping lines will need to recover this extra cost. This is the reason for surcharges which will likely be implemented during the 4th quarter of 2019 or by latest 1st of January.
For further details please read the link below, we will of course be at assistance for any further questions,