News & Publications
How Low Sulfur Fuel is Affecting the Ocean Vessel Industry
On January 1st, 2020 a new set of regulations limiting the amount of sulfur in the fuel oil used by ocean vessels went into effect. The new limit for Sulphur in fuel oil used onboard ships operating outside designated emission control areas is reduced to 0.50% m/m (mass by mass). This means ocean vessels now have to change the oil they use going forward. While this will dramatically increase ocean carriers’ cost, it will, in turn, limit the number of harmful pollutants caused by sulfur oxides. These pollutants can cause acid rain, harmful respiratory symptoms including lung disease, and other forms of air pollution that affect towns and cities closest to major ocean ports. The goal is to cut carbon emissions from ocean transportation in half by 2050 to help with the growing urgency of climate change.
Although they are many positive aspects of the new regulations there are also some negative effects of the regulations. According to CAI Transportation Blog, fuel costs will rise by an estimated 25% in 2020, the equivalent of $24 billion dollars. So far this year rates have not risen dramatically. In fact, according to Universal Cargo, the United States West Coast shipments have only risen $80 per FEU and United States East Coast shipments have risen only $38 FEU. However, as the year progresses, and carriers get used to how much the rise in fuel costs affects them ocean, rates will increase. This, on top of other trade wars going on, will dramatically change how material moves from one place to another. Therefore everyone within Allyn who works in the transportation field should take note of how the rise in fuel costs will affect carriers and potentially affect all aspects of our jobs.
Contributor: DJ Giblin
About Allyn International
Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.