IMO 2020 LOW SULPHUR REGULATIONS
Last October, we informed you that the International Maritime Organisation (IMO) will be implementing the Low Sulphur regulations as from 1st January 2020.
The IMO is the organisation within the UNO which is in charge of ocean carriage regulations. In particular, they control pollution relating to worldwide ocean carriage. In 2008, they defined the limits not to be exceeded for sulphur content regarding marine fuel.
Outside the areas of special sulphur emissions (SECA), where lower limits of 0.1% will remain in force, it was decided in 2016 that, as from 1st January 2020, all maritime zones worldwide are to comply with a sulphur content limit of 0.5%, instead of 3.5%, which is the maximum sulphur rate authorised at present.
Thus before then, the shipping companies will be obliged to change the fuel used for their entire fleets, which will entail considerable investments. Each one of them has already announced a rate increase varying from 160 to 350 USD per TEU.
To date, we have observed the implementation of the LSS (Low Sulphur Surcharge) China on all containers leaving Chinese ports, the LSF (Low Sulphur Fuel Surcharge) or again the MFR (Marine Fuel Recovery) according to the shipping companies. The BAF (Bunker Adjustment Factor), which already exists, is also subjected to readjustments.
It is very likely that the cost of these measures will increase progressively during the course of the year.
[october article] The International Maritime Organisation (IMO) is to put into force as from 1st January 2020, as part of an environmentally-friendly approach, new regulations which will aim at reducing sulphur emissions by 85%.
The measure will be accompanied by supplementary costs through the application of a bunker adjustment factor (BAF) which will vary according to the market.
CMA CGM estimates the average surcharge at around 160 USD per TEU. Maersk has been talking of an extra two billion USD per year on their invoicing. So it is to be foreseen that the regulations will have an impact on costs with all the shipping companies.
Balguerie’s teams remain at your disposal.