International Maritime Organization (IMO) Low Sulfur Regulation

Source: JoC

The new International Maritime Organization (IMO) Low Sulfur Regulation will be effective as of January 1, 2020 and will require all shipping companies to reduce their sulfur emissions by 85%. 

This new regulation aims to reduce the environmental impact of the industry and significantly improve air quality.

Having adequate supplies of bunker fuel with 0.5 percent sulfur content, and the necessary fueling infrastructure in place, even before the deadline, will be critical to smooth implementation of the rule subscribed to by most maritime nations.

Carriers have several options for meeting the IMO requirements. In addition to the low-sulfur fuel option, some carriers are ordering onboard scrubbers that reduce the sulfur content to 0.5 percent. Liquefied natural gas (LNG), which is used now in some of the coastal trades, is even more environmentally benign, although fueling infrastructure and LNG availability limit this option. Therefore, the vast majority, possibly as much as 95 percent of the global liner fleet, will be switched to 0.5 percent fuel, according to a study by the Coalition for Responsible Transportation.

Carriers and beneficial cargo owners are preparing for bunker fuel costs to increase later this year and into next year due to the higher production costs of low-sulfur fuel. According to Argus Marine Fuels, the price of high-sulfur bunker fuel last week was $410.70 per metric ton, compared with $545.40 per metric ton for the low-sulfur fuel, a difference of $134.60 per metric ton (33 percent). That could increase the cost of carrying each container by about $150-200 per TEU, according to the Coalition for Responsible Transportation, although costs will vary by the length of the voyage to the West Coast or East Coast.

Delmar will continue to monitor the market and offer our customers the most competitive rate and service options available. 

Additional information may be obtained by contacting your local Delmar representative.

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