Maritime Transport Costs on the Rise

From 2020 onwards, the fuel used by ships worldwide should not exceed 0.5% sulphur concentration, forcing transporters to consume higher priced fuels, which could become even more expensive because of increased demand.

Tuesday, September 10, 2019

From January 1, 2020, the concentration of sulphur in the fuel consumed by maritime transport vessels must not exceed 0.5%, a limit that until now was at 3.5%.

The international modifications related to the supply of fuel oil or marine fuel, which were approved by the International Maritime Organization (IMO), will apply to all ships sailing in the world.

Carriers will have to choose between some options to comply with the new rules. One is to continue using the same fuel but with gas scrubbers, which are expensive systems and could be banned in the medium term.

Another is to use alternative fuels, such as liquefied natural gas (LNG). The problem with this option is that it does not fit all shipping lines and needs a specific supply structure.

The most suitable option seems to be to use low sulphur marine fuel oil or marine diesel, which will adapt to the new regulations.

Martesfinanciero.com reviews that "... Nelly Grassin, from Armateurs de France, explains that 'The first consequence will be an increase in cost for ship-owners, who could pass on part of the cost to their customers which, as well, would affect the price of materials transported. The new fuels, more sophisticated and more refined, are twice as expensive, but they could increase more as demand rises."

The article adds that "... For oil companies it is a business, at least immediately, because their refining margins will increase. But at the same time the companies will have to get rid of the heavy fuel oil, whose surplus can be used to feed the power plants, among others. The increase in demand for more sophisticated oil products will also affect fuels for cars and planes, the prices of which could rise.

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