On 1 January 2020, the International Maritime Organisation (IMO) will implement a new regulation for a 0.50% global sulphur cap for marine fuels. Under the new global cap, ships will have to use marine fuels with a sulphur content of no more than 0.50% against the current limit of 3.50% in an effort to reduce the amount of sulphur oxide.The end goal is net zero CO2 emissions by 2050.
According to Industry estimates roughly 90% of the global vessel fleet will need to rely on compliant fuels when the new rules come into effect on January 1st, 2020. The major shipping lines will be exposed to huge costs, and will need to invest in different technologies to meet the new standards. The global industry forecast has been estimated at approximately U$24B in total to become compliant.
Most of the shipping lines have so far announced that the costs of compliance will be passed on to their customers. Their view is that they should not have to pay for the these costs as the protection of the environment is a cost we must all share. On September 11th, Maersk Line announced it would levy a new EFF (Environmental Fuel Fee) applicable to all spot business, and to existing contracts, with a validity up to 3 months. They have advised that the EFF levy will apply from December 1st, 2019.
As we get closer to the end of the year we should start to see more shipping lines publish their intentions to the market. Once we have this information to hand we will be in touch.
If you have any questions on this matter please do not hesitate to contact us at any time.