{"id":15069,"date":"2020-03-25T19:38:40","date_gmt":"2020-03-25T19:38:40","guid":{"rendered":"http:\/\/www.felana.com.mx\/eng\/the-imo-2020-cloud-dissipates-as-carrier-policies-are-adopted\/"},"modified":"2020-03-25T19:38:40","modified_gmt":"2020-03-25T19:38:40","slug":"the-imo-2020-cloud-dissipates-as-carrier-policies-are-adopted","status":"publish","type":"post","link":"https:\/\/www.felana.com.mx\/eng\/the-imo-2020-cloud-dissipates-as-carrier-policies-are-adopted\/","title":{"rendered":"The IMO 2020 Cloud Dissipates as Carrier Policies are Adopted"},"content":{"rendered":"

The IMO 2020 cloud seems to be dissipating. There had been much confusion leading up to the January 1, 2020 implementation date of the global mandate.<\/span><\/h4>\n

In 2018, the International Maritime Organization (IMO) developed a strategy to reduce greenhouse gas emissions. Shipping carrier vessels must meet the mandate by limiting bunker fuel to 0.5% sulfur content instead of the 3.5% used today. This, of course, comes with a cost. The costs to become IMO 2020-compliant are too big for ocean carriers to bare alone. For instance, Hyundai has reported scrubber installation costs of $5 to $8 million per ship.<\/p>\n

There are various strategies carriers can take to reduce greenhouse gas emissions and meet the 0.5% sulfur content mandate.<\/span><\/h4>\n

Carriers can choose to pay a premium for low-sulfur fuel oil (LSFO) with 0.5% sulfur, use liquefied natural gas (LNG) or install scrubbers on their ships. Scrubbers will allow the vessel to continue use of high-sulfur fuel oil (HFSO) with 3.5% sulfur content. The LSFO is the less popular of the two because of the unknown LSFO cost, nor is it clear how much LSFO supply is available. Therefore, most carriers have chosen scrubber installations. As mentioned above, scrubbers will allow the buying of cheap heavy high-sulfur fuel.\u00a0 Most important, scrubbers reduce sulfur oxide (SOx) emissions which help save our climate.<\/p>\n

Ocean carriers have started to pull ships out of rotation to retrofit with scrubbers.<\/span><\/h4>\n

The associated costs are being passed down in the form of surcharges. These charges can be confusing. There are many factors included in the calculations, such as the TEU capacity on a ship, headhaul vs. backhaul, the price of fuel, and the trade lanes involved. January 1, 2020 is around the corner, so carriers have begun to release their fuel cost recovery methods.<\/p>\n

Because of the complexity of charges, I\u2019ve highlighted a few key takeaways:<\/strong><\/p>\n