2020 Vision On Freight Costs

1 Nov 2019:The Impact of IMO 2020 on Freight Rates

Anyone who follows the shipping industry or is involved in the refining business will be aware of the fuel change affecting the shipping markets in 2020, with the implementation of the International Maritime Organization (IMO) Sulphur regulations. After January 1, 2020, ships will be required to burn fuel with a maximum Sulphur content of 0.5%, compared to 3.5% currently. Alternatively, owners can install exhaust gas cleaning equipment (often called scrubbers) on the ships, but only a small percentage of ships will have such equipment by the start of the year. As a result, the freight rates will, at least initially, be driven by ships without scrubbers, burning more expensive low Sulphur fuel. This week, we will analyze what the impact of the higher fuel costs will be on the tanker rates for some major trade routes.

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