The maritime industry will feel the impact of the International Maritime Organization’s (IMO) 2020 sulphur regulations for “at least a year”, according to online freight forwarder iContainers.
A sulphur cap, which bans fuels that produce sulphur oxide emissions of more than 0.5%, is scheduled to take effect on January 1, 2020 and will incur a “costly compliance process” that many of the leading carriers are still trying to manage.
iContainers has emphasized that the cost of transitioning to more sustainable fuels, or retrofitting existing vessels with environmentally friendly features, is estimated at USD $10-15 billion a year.
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In order to deal with this massive expense, carriers and shipowners are shifting “a big part” of the increased cost to its customers, introducing new surcharges for shippers.
Aliona Yurlova, expert in international business development at iContainers, said: “The immediate impact will be much higher surcharges. More specifically, expect the Bunker Adjustment Factor (BAF) to be significantly higher in the first 12 to 18 months.
There is also an expected 15 to 20 percent increase in rates and up to a 10 percent decrease in capacity, which will leave the maritime market quite shaken for at least the initial year.”
iContainers said that a truck shortage in the past 12 months since the enforcement of the Electronic Logging Device (ELD) has caused congestion and delays… @icontainers #PTIDaily #Automation #SupplyChainhttps://t.co/ELLTH4B1e4
— Port Technology (PTI) (@PortTechnology) April 25, 2019
Although IMO 2020 represents one of the most important regulations in maritime history, iContainers believes that many shippers remain unaware and unprepared to deal with its consequences.
Yurlova added: “Shippers tend to rely on their freight forwarders to provide them with new market information and advise and guide them accordingly.
“As an intermediary, freight forwarders are equipped with the information needed to assist shippers with making timely and accurate decisions. These include market information related to carriers, new regulations, peak seasons, capacities, rates, surcharges, etc.
“At the same time, they are the ones who best understand what shippers and big and small companies need.”
iContainers has advised shippers to plan their shipments earlier than usual – up to three or four weeks in advance – to avoid problems.
“The best thing for them to do would be to analyze their yearly flows; how much they ship, where to, from where, what type of cargo, when do you ship the most, least, and speak to their freight forwarder and plan around it.”