2020 bunker changes

The sea freight bunker fuel operation will change significantly when the IMO’s global 0.5% fuel sulphur content cap is enforced from 2020, with shipping lines looking to pass on the additional costs.

The International Maritime Organisation (IMO) has ruled that from 1 January 2020, marine sector emissions in international waters will be slashed. The marine sector will have to reduce sulphur emissions by over 80% by cleaning existing fuel systems (using scrubbers) or switching to more expensive lower sulphur fuels.Bunkering-or-taking-fuel

Many container lines rolled out new bunker surcharge formulas (BAF) from the beginning of 2019, with the intention of keeping the BAFs separate from the freight, so it would not be eroded during any depressed periods.

A few carriers are looking to implement ‘IMO 2020’ BAFs in the final quarter, as they replenish the tanks of their vessels with the more expensive low-sulphur fuel, in order to be compliant at the start of the new year

Scrubber systems (e.g. chemical scrubbers, gas scrubbers) are a diverse group of air pollution control devices that can be used to remove some particulates and/or gases from industrial exhaust streams.

Some lines have opted for compliance with the use of marine scrubbers to clean sulphur fuel oil (HSFO) of its sulphur content, with many seeking to pass on additional costs through their BAF surcharge.

It is still not clear how IMO 2020 will play out. Initial indications had been that the vast majority of ships would switch to the cleaner fuel from next January, but it now appears that far more vessels than expected, including Maersk and Hapag-Lloyd, are having scrubbers fitted, as operators and crew can use a fuel they know and are used to operating with and engines will be using a fuel they are used to.

The possibility of a two-tier BAF, low-sulphur fuel or scrubber-fitted, cannot yet be discounted.