As IMO 2020 deadline nears, shipping sector makes final push to adapt

As IMO 2020 deadline nears, shipping sector makes final push to adapt
02/09/2019

Benjamin Franklin once said: “You may delay, but time will not.” This is certainly true for the international shipping industry as it prepares for a plethora of stricter environmental rules that are set to bring escalating costs and operational challenges.

Among the upcoming rules, the International Maritime Organization’s global sulfur limit for marine fuels, which will be cut to 0.5% from January 1, 2020, is among the most significant.

While restrictions on sulfur emissions in shipping are not an entirely new concept, as emissions control areas in certain regions have long existed, the transition to the IMO 2020 rule is daunting. The majority of bunker demand will have to switch from high-sulfur fuel oil (HSFO) to 0.5% sulfur almost overnight, calling for extensive planning by shipowners, charterers, ship crew and refiners, among others.

The operational challenges will be manifold, and the costs astronomical. S&P Global Platts Analytics estimates the total global impact of this rule on various sectors in the energy space, as well as other industries, will be in excess of $1 trillion over five years.

Shipowners will have to choose a marine fuel strategically, considering factors such as the age of their vessels, trading routes and locational availability of the various fuel options. They will also have to manage the fuels after bunkering, with critical factors being how many receiving tanks the vessel has and tank segregation requirements.

According to Platts Analytics, the global bunker fuel specification changes in 2020 mean some 3 million b/d of HSFO will have to be replaced. As a result, LSFO, marine gasoil and blended distillates will all play important roles in the bunker fuel mix in 2020 and onward.

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