IMO 2020: Low Sulphur Fuel Regulation

IMO 2020

As from 2020 containerships will have to use a more environmental friendly marine fuel. New regulations by the International Maritime Organization (IMO) focus on cutting the sulphur oxide gas emissions of ships, resulting in a (temporarily) higher cost for shipping lines, and subsequent higher seafreight rates.

 Starting the 1st of January 2020, the International Maritime Organization (IMO) will implement a new regulation imposing a 0,5 % global sulphur cap for marine fuels.

Under the new regulation, ships will have to use marine fuels with a sulphur content of no more than 0.5 % (VLSFO Very Low Sulphur Fuel Oil) against the current limit of 3.5% (IFO380 Intermediate Fuel Oil) in an effort to reduce the amount of sulphur oxide.
The already existing Emission Control Areas (ECAs) will remain at the 2015 standard of 0.1% sulphur content.

There are currently three options for meeting the IMO’s 2020 sulfur limits:
     - use Very Low Sulpur fuel oil (VLSFO)
     - install new build scrubbers or retrofit scubbers (filters) which allow ships to continue to use HSF (IFO380)
     - converting to LNG

The cost to be compliant with the new regulation is – at this moment – significant. Substantial investments are needed to install scrubbers on containerships, or vessels will have to bunker the new VLSFO at a higher cost compared to the current fuel (IFO380).
Therefore we expect that shipping lines will pass on the extra costs to the shippers by increasing the seafreight rates as from 1st of December 2019.

For more detailed information, please contact your account manager at Shipex.