Graphic shows bunker fuel demand and world’s largest bunker fuel ports.
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ENVIRONMENT

New IMO regulations to cut marine pollution

By Duncan Mil

January 1, 2020 - Strict International Maritime Organization rules kick in on January 1 to reduce air pollution, prohibiting ships from using fuels containing more than 0.5% sulphur -- down from 3.5% today.

The shift to cleaner fuel is expected to add US$13-$15 billion a year to the industry’s fuel bill -- costs which the industry will pass along to its customers. Fuel costs are shipowners’ single most significant expense and shipping accounts for 90 per cent of world trade.

How carriers recoup the rising cost of fuel will be critical to their profitability. Shipowners will likely pass it on to shippers as a “Bunker Adjustment Factor” (BAF).

Since early October, the average low-sulphur bunker price for major bunkering ports tracked by Drewry -- maritime research service -- has been $542 per tonne, up from the $396 cost of high-sulphur fuel oil (HSFO) at the same bunkering ports. Shippers and forwarders are expected to set a BAF of around $145 per container from January.

Shipowners have limited ways to comply with the rule change. They can buy IMO-compliant fuels, or they can install expensive sulphur-reducing scrubbers.

Whatever happens, the impact will affect trade in everything from commodities like oil, soybeans and steel to items that move on container ships, like TVs, smartphones, furniture and clothes.

PUBLISHED:26/11/2019; STORY: Graphic News
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