IMO 2020

Increasing costs on sea transport

10. september

On 1 January 2020, The International Maritime Organization (IMO) implement a new regulation for a max. 0,5% global sulphur cap for marine fuels, lowering it from the present 3,5%. The marine sector will thereby reduce emissions by +80% and increase focus on environmental problems.

To comply with the new regulations, container and shipping lines have the following options:

  • Switching to the more expensive LSFO (Low Sulphur Fuel Oil) and thereby reduce emissions.
  • Continuing using HSFO (High Sulphur Fuel Oil) and install filters/scrubbers to remove particulates and gases from the exhaust.
  • Converting to a non-petroleum fuel such as LNG (Liquefied Natural Gas).

New regulations cause increasing costs.
All container and shipping lines must comply to the new IMO 2020. Maersk has announced that the regulations will cause a yearly fuel cost of +2 billion USD (additional 100-200 USD per TEU). The extra cost is expected to be applied during Q4 2019.

IMO 2020 impact and extended transit times.
In addition to extra costs, extended transit times are expected to affect the entire industry. Older vessels are likely to be scrapped. Increasing demand for LSFO fuel and decreasing demand for HSFO fuel will cause higher fuel costs. The costs for installing filters/scrubbers is 5-10 million USD per vessel and each vessel will be out of rotation for 4-6 weeks, which will temporarily disrupt sailing schedules and reduce capacity with expected 7-8%.

At LEMAN we feel obliged to keep you informed of the potential consequences of IMO 2020 and encourage you to start preparing and planning for the 2020 regulations. You are welcome to address your IMO2020 related challenges to your local LEMAN contact, and we will get back to you on the topic, with as much information available to us.

Best regards