BULLETIN : INTERNATIONAL MARITIME ORGANISATION 2020 LOW SULPHUR REGULATION : CONTAINER RATE COST IMPACT 01.12.19

Effective from 1^st January 2020 the International Maritime Organisation (IMO) Low Sulphur Regulation will come into force requiring all sea-going vessels to comply and reduce sulphur emissions by 85%.

In order to comply sulphur in fuel oil must be reduced from 3.5% to 0.50% which will reduce the amount of sulphur oxide emissions, hence delivering an  improvement in air quality and reducing risks of acidification in our oceans.

The new IMO 2020 Low Sulphur Regulation will impact the shipping industry globally with shipping costs set to increase worldwide effective 1^st December 2019.  Ostensibly the cost increase will cover the price differential between the present High Sulphur Fuel Oil and the new Very Low Sulphur Fuel Oil .

Our current analysis shows the net effect will be between USD 70 -110 per teu on current container rate levels. Presumably each carrier and route will attract a unique cost. For forward costing models it would be deemed prudent to build in the higher level per 20 GP teu across the board going forward.

Should you have any questions on this subject matter please do not hesitate to contact our office directly.