January 2020 is a key date on the maritime transport calendar. New environmental regulations limiting sulphur oxide emissions, the IMO 2020, will come into force on 1 January and will require vessels only to use fuel with a maximum 0.5% sulphur content. The current standard is fuels with a sulphur content of 3.5%.
The IMO 2020 standard is the first of a series of measures that the International Maritime Organisation (IMO) is implementing to reduce sea pollution. Good news for the environment, but how may it affect my business?
The initial additional fuel cost for the industry is estimated to be USD 60 billion a year during the first years.
WHAT IS THE IMO 2020?
As of 1 January 2020, and pursuant to the legislation introduced by the International Maritime Organisation (IMO), the sulphur limit will have to be reduced to 0.5% in the fuel used by vessels operating outside the emissions control designated areas. All vessels will be required to comply with this limitation, either by using MGO marine gas oil or natural gas, or by installing scrubbers.
WHAT ARE THEIR GOALS?
To ensure a cleaner environment by limiting sulphur oxide emissions from vessels.
WHO WILL BE AFFECTED BY THIS NEW LEGISLATION?
It will directly affect shipping companies, which will have to use more environmentally-friendly fuels and therefore make new investments to fit their vessels with new engines.
WILL THE IMO 2020 AFFECT MY BUSINESS?
Logically, the shipping companies will end up passing on this extra cost to the rest of the logistics chain and the tariffs currently in use can be expected to be adjusted.
WHAT DO WE KNOW SO FAR?
The shipping companies so far know the extent of the technical measures to be taken and the foreseeable impact on their cost overruns (even prior to 1 January 2020), but without specifying the rises on the freight costs. We will inform you in a timely manner as we learn how those changes will impact our respective businesses.