Unease over IMO’s 2020 global emissions regulations

There was considerable unease among global shippers, beneficial cargo owners (BCOs) and freight forwarders ahead of the IMO’s 2020 global emissions regulations, due to come into force on January 1st 2020, according to a survey conducted by global shipping consultancy Drewry.

Respondents were particularly concerned about carriers’ methods of fuel cost recovery. More than half of respondents (56%) said that they did not consider their service providers’ existing approaches were either fair or transparent.

Four out of five of the respondent shippers/BCOs said that they had yet to receive clarity from their providers as to how the widely anticipated future fuel cost increases would be met.

A third of respondents admitted to having poor or very poor awareness and understanding of the new regulation.

Drewry said that the level of uncertainty today as to the total cost impact was so large that nobody was willing to provide a confident forecast of the cost of compliance.

At the moment the independent futures prices out low-sulphur marine fuel at 55% higher than current high-sulphur fuels

Philip Damas, Head of Drewry Supply Chain Advisors, said that “the IMO low-sulphur rule change represents a very significant, industry-wide, change event which will likely have far reaching effects on the global shipping industry for many years to come. Given the scale of the extra costs triggered by the new regulation and the carriers’ expectations that their pricing and fuel charge mechanism with customers must be restructured, there is a need for carriers to address the transparency concerns expressed by their customers.”

Drewry is working in cooperation with shipper members of the Drewry Benchmarking Club on an IMO low-sulphur rule ‘cost impact tool’ based on robust market data.