The total cost of compliance is expected to cost the shipping industry up to $15 billion annually, a part of which shipping carriers including CMA-CGM, ONE, OOCL, and APL have all said will be passed onto customers. Due to manufacturer-related capacity reasons, however, the possibilities for installing the "scrubbers" are limited and expensive. Since January 1, 2020, container ships worldwide are only allowed to refuel with fuels with a maximum sulfur content of 0.5 percent. According to Maersk, the transport of a single television set from Asia to Europe, for example, will continue to cost no more than two US dollars. The IMO 2020 is one of the most significant changes in the maritime sector in recent history and major cross-industry impacts. WHAT IS THE IMO 2020 REGULATION? All sea-going vessels worldwide will have to comply and reduce their sulphur emissions by 85%. The International Maritime Organization (IMO) is a branch of the United Nations that sets global standards for international shipping. Hellmann CEO Reiner Heiken recently shared this view in a statement for the Frankfurter Allgemeine Zeitung: "Today, environmental protection and sustainability are central criteria for the economy, which must also be taken into account in operational business - this applies in particular to the transport sector. Energy consultancy firm Wood Mackenzie puts the number of orders for scrubbers at over 2,000. “The main type of “bunker” oil for ships is heavy fuel oil, derived as a residue from crude oil distillation. Demand for high-sulfur residual fuel oil for ship bunkers was 3.5 million barrels per day in 2018—out of 7 million barrels per d… The sulfur limit for ships in ECAs stands at 0.1% m/m. Customers with spot quotes and contracts with a term of up to three months can thus be assured of a transparent price on a monthly basis that is directly market-oriented. Substantial investment required; ships must dry dock to be retrofitted; lines need to comply with wash water disposal regulations in various countries: But various lines have been using various … Introducing IMO 2020. According to industry estimates, more than 90% of the global vessel fleet will be relying on compliant fuels when the sulphur rules step into force on 1 January 2020 and lines will need to invest in different technologies and operational investments such as scrubbers etc.. In addition, the low availability means it’s unlikely that many vessels will be equipped with new mixtures of low sulfur fuel during the initial period. Hellmann is thus positioning itself as a transparent partner in a market that is still uncertain. Crude oil itself contains sulfur elements that remain in the residual bunker oil even after distillation. Questions have, however, been raised over its sustainability and overall environmental benefits. Shipping companies have three options for keeping their combustion-engine ships operational in 2020: Retrofitting to LNG, as well as the installation of the cleaning systems, will lead to the need to remove ships from the timetable, at least in the short term. July 30, 2018 October 31, 2018 Alan Apthorp. As shipping vessels burn and consume bunker oil, they emit sulfur into the atmosphere as a harmful byproduct. Vessel operators have the following choices to comply with the new IMO 2020 sulphur limits: 1. The residual oil that is left after this process is known as bunker oil, which is used to power shipping vessels. Vessels operating in these areas must comply with the specific measures that have been set, usually pertaining to the reduction of nitrogen oxides and sulfur oxides emissions. You don’t have to be an avid reader of ocean freight news to have heard of the term IMO 2020. IMO 2020 Regulation The International Maritime Organisation (IMO) rules on sulphur in fuel oil for shipping and the effect on Africa On 1 January 2020, a new global cap by the IMO on sulphur content in marine fuels will come into effect. One of the main difficulties with regulating maritime pollution is the vast swaths of the ocean that are not governed by any state. The IMO 2020 regulations reducing sulfur oxide emissions to less than 0.50% will have a significant impact on today’s shipping industry. Lower sulfur emissions will improve air quality in port cities as well as lessen ocean acidification. “One of its direct and long-term impacts will be on ocean freight rates and space availability. What impact does this have on the industry? In order to compensate for these additional costs (MSC expects 2 billion US dollars), the shipping companies have already announced surcharges: BAF - Bunker Adjustment Factor (Maersk Line), BRC - Bunker Recovery Charge (MSC), MFR- Marine Fuel Recovery (Hapag-Lloyd) or OBS - One Bunker Surcharge (ONE). Pacific vs Atlantic). “IMO regulations to reduce sulphur oxides (SOx) emissions from ships first came into force in 2005, under Annex VI of the International Convention for the Prevention of Pollution from Ships (known as the MARPOL Convention). For customers with longer contract terms, a 2-month or 3-month review of the Pelorus BAF can also be agreed in individual discussions in order to be able to guarantee customers more stability in the medium term. What is IMO 2020? Implications for On-Road With so many unknowns and contributing factors at play, the IMO 2020 regulation could lead to a fuel price increase. Delay fees and GRIs have the potential to greatly affect your overall shipping costs. The IMO 2020 regulation applies to all ships on international and domestic voyages. These sulfur elements make up around 3.5% of its weight. It has a significantly lower sulfur concentration (of approximately 0.1%) but is also significantly more expensive than scrubbers. Crude oil contains sulphur which, following combustion in the engine, ends up in ship emissions.”. The current sulfur limit of 3.5% m/m will be reduced to 0.5% starting 2020. IMO 2020 will be one of the most dramatic fuel regulation changes ever implemented, with a significant impact on the global economy. To combat these emissions the IMO2020 regulation states that the limit of Sulphur in fuel oil used must be reduced from current regulations of 3.50% m/m, down to 0.50% m/m (mass by mass). Together with strong partners, we operate weekly block trains between China and Europe with capacities of up to sixty 40-foot containers per departure. From 1 January 2020, the limit for sulphur in fuel oil used on board ships operating outside designated emission control areas will be reduced to 0.50% m/m (mass by mass). This islikely to further fuel the shortage of cargo space and thus the rise in rates.The installation of the "scrubbers" ensures that pollutants are removed from the ship's exhaust gas so that conventional, higher-sulfur fuels can continue to be used. Some resources are not available on server temporarily. It is the first of a whole series of measures by the International Maritime Organisation (IMO) to reduce environmental pollution. With the implementation of IMO 2020, the International Maritime Organisation aims to reduce total sulphur emissions from ships by 77% from 2020 until 2025. Impact of IMO 2020 on Fuel Prices. The 2010-built and 250m in length tanker is now positioned off … It’s important to understand the bunker surcharges being implemented by carriers, especially those who provide services for your desired shipment route. ... Generally, most analysts project that 70% to 80% of the world’s vessels will comply with the IMO 2020 regulation by using 0.5% or lower sulfur marine fuel. And we know that an increase in freight rates for raw materials such as iron ore and coal will likely translate to higher costs for the steel sector. Opinion. Low Sulfur Fuels such as Marine Gas Oil (MGO) is one of the highest quality marine fuels currently available on the market. High-sulfur fuel oil will drop in … The regulation of sulfur emissions - called IMO 2020 - keeps shippers, freight forwarders and shipowners alike in suspense. The regulations, dubbed IMO 2020, will enforce a 0.5% sulfur emissions cap worldwide starting January 1, 2020 ─ a dramatic decrease from the current emissions cap of 3.5%. Shipping large volumes grant will greater bargaining power for NAC or spot rates. With the implementation of the IMO regulation in 2020, the shipping industry will have to consider a switch to alternative fuels, such as marine gas oil (MGO), or install scrubbers, a system that removes sulphur from exhaust gas emitted by bunkers. Other carriers (ONE, MSC, Hapag-Lloyd) are relying on a mix of the various possibilities for reducing Sulfur emissions. Understanding how it affects your supply chain? Also known as Heavy Fuel Oil (HFO), this type of fuel is obtained from crude oil through a refining process called distillation, which involves purifying the crude oil through heating and cooling to extract hydrocarbons such as gasoline and diesel. This Low Sulfur Fuel (LSF) is intended to massively reduce the industry's ecological footprint. The Impending IMO Regulation and its Unknown Impact to Shipping. Scrubbers refer to cleaning systems of exhaust gases. 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