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IMO's "Sulphur 2020" to reduce sulphur oxide

The International Maritime Organization (IMO) is taking initiative to promote sustainability and reduce harmful sulphur gas emissions. While the new regulation will be fully enforced in 2020, it will likely impact logistics cost for shippers in the second half of 2019 due to investments on the carriers’ side.

What is “Sulphur 2020”?

Commonly known as “IMO 2020 fuel sulphur regulation”, this is an initiative from the IMO which aims to reduce sulphur oxide emissions from ships.
By the deadline of January 1, 2020, all carriers will have to comply with the new regulation, which imposes a 0.5% global sulphur cap on fuel content and replaces the current limit of 3.5%.


Why is IMO introducing “Sulphur 2020”?

IMO is proactively taking steps to reduce marine pollution and minimize the vessels’ impact on global warming. Currently, most of the cargo ships use heavy fuel oil which is derived from crude oil and contains sulphur oxide. The gases can cause acid rain and trigger respiratory diseases. Therefore, the level of sulphur oxide emissions has been tightened progressively throughout the past decade.

“Sulphur 2020” impact on shippers

With the new regulation being fully enforced at the start of 2020, its positive and momentous impact on the environment and on people's health is undoubted.
Carriers might switch to low-sulphur fuel or invest in Exhaust Gas Cleaning Systems[1] or Liquefied Natural Gas Ships[2]. However, all these options mean a significant increase in operational cost. Consequently, major carriers have started changing their calculation of surcharges and pricing and announced a new Bunker Surcharge which will come into effect as of January 1, 2019.

While the calculation remains complex and carriers have individual approaches on how to determine the surcharge, it is very much clear that they will share the cost with shippers.

If you have any questions concerning your shipments, please feel free to reach out to your local DACHSER representative.

[1] A cleaning system commonly known as a scrubber to clean up the sulphur oxide emitted from the vessel’s engine.
[2] Vessels that are powered by Liquefied Natural Gas (LNG) which is considered a cleaner fuel with less emission of greenhouse gases including sulphur oxide.

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