What the IMO 2020 Entails

The shipping industry has 11 months until the International Maritime Organization's Sulfur Regulations, commonly referred to as IMO 2020, takes effect.  

The shipping industry is one of the greatest contributors to pollution and carbon emissions on the planet. IMO 2020 will limit the sulfur content of ships’ oil and have far-reaching consequences throughout the environment and global economy. 

Starting Jan. 1, 2020, all carrier’s globally will have to reduce emissions from vessels with the use of bunker fuel with a sulfur content of 0.5%, compared with 3.5% sulfur in the high-sulfur fuel. Shipper’s will not need to make changes to their process of booking cargo but will have to prepare for the inevitable price hikes. The IMO mandate stipulates that Carriers can comply by installing sulfur scrubbers on the vessels, which will allow for lower cost high-sulfur fuel. They can also purchase and use low sulfur fuel or use liquefied gas (LNG). 

This IMO 2020 mandate is estimated to cost carriers an additional $10-15 billion annually. Compliance is expected to increase the cost of port-to-port moves by 10-20%. In addition, it will cause both temporary and permanent effects that will force carriers to reduce their total capacity by 7-8%.

It will be up to individual countries to enforce the new regulations. In the U.S., the responsibility falls on the Coast Guard, who conduct approximately 9500 Port State Control examinations on foreign vessels every year to ensure compliance with safety, security, and environmental protection requirements.

Contributor: Kristi Aitken

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