Low-Sulfur Fuel Rule

Low-Sulfur Fuel Rule

Starting Jan. 1, 2020, all ships must burn fuel with a content of 0.5 percent sulfur to comply with an International Maritime Organization amendment to the International Convention for the Prevention of Pollution from Ships (MARPOL) known as Regulation 14. 

As a result, a host of challenges face international container shipping by sea. These include concerns over higher costs, international compliance, and the availability of low-sulfur fuel at key international bunkering hubs such as Rotterdam and Singapore. 

Carriers have three paths to compliance, including the use of low-sulfur fuel, installing scrubbers and burning regular bunker fuel, or transitioning to liquefied natural gas to power vessels.

News & Analysis

27 Feb 2020
The IMO is taking seriously concerns raised in Europe that certain blends of low-sulfur fuels can emit greater amounts of harmful black carbon than the high-sulfur fuels they are meant to replace.
14 Feb 2020
Sponsored: NAI's Adam Roth on his "Rule of 1.5," and the transportation concerns that will impact real estate in 2020/2021. Roth discusses maritime and trucking regulations, precision scheduled railroading, and his bullish outlook on the market.
06 Feb 2020
The price of low-sulfur fuel has fallen sharply off its January highs, but the monthly review period that governs bunker adjustment factor mechanisms means surcharges are going up.
30 Jan 2020
Container shipping analysts say contract and spot rates are following seasonal patterns that do not reflect the added costs that come with IMO 2020 compliance.
28 Jan 2020
The use of low-sulfur fuel and LNG in shipping have come under fire from groups in Europe alleging that harmful emissions from certain low-sulfur blends and methane could be harmful to the environment.
27 Jan 2020
The true success of carriers’ attempts to recover low-sulfur fuel costs via bunker surcharges may only be evident once the first-quarter financial results are released, but so far it is not looking good.
24 Jan 2020
Carriers’ growing experience in reducing short-term capacity without having to resort to more disruptive actions like eliminating full services is a profound change in the market that will help the carriers absorb blows that in the past would wipe away profits like a dustrag.
21 Jan 2020
The price of low-sulfur fuel has risen sharply in January, with the volatility exceeding expectations.
20 Jan 2020
Decarbonizing global shipping comes with a huge price tag, but much of the costs will be required in landside infrastructure investment.
Return of scrubber-fitted ships to test carrier capacity plans
15 Jan 2020
The fleet-to-orderbook ratio is at its lowest in nearly a decade as carriers maintain a tight grip on capacity, aided by scrubber retrofitting and scrapping.
06 Jan 2020
Spot rate hikes in the major container trades in early 2020 are only slightly higher than the historical average for this time of year, and as such, shippers should brace themselves for further increases.
06 Jan 2020
The impact of steadily rising low-sulfur fuel prices on carriers is being partly offset by a strong increase in the Asia-Europe spot market, but the traditional slack season is just a couple of weeks away.
Trans-Pac carriers recouping IMO surcharges, but scale unclear
03 Jan 2020
Recent quotes by carriers on their surcharges for more expensive low-sulfur fuel oil are confusing shippers and causing suspicion carriers are attempting to make unreasonable profits from the global LSFO mandate that took effect Wednesday.
13 Dec 2019
Drewry's Head of Research Products Martin Dixon on fleet and rate projections for breakbulk and project cargo, uncertainty around tariffs, oil prices, and the shipping cost implications for cargo owners of the IMO 2020 low-sulfur fuel regulation.
Alphaliner raises alarm over possible overcharging on low-sulfur fees
11 Dec 2019
Carriers have struggled to lift spot rates on the Asia-Europe trade, and the wide variations in low-sulfur surcharge levels have an analyst asking questions.
10 Dec 2019
The bunkering hub of Rotterdam has reported a huge increase in low-sulfur fuel sales in November as carriers fill up ahead of the Jan. 1 implementation of the IMO 2020 mandate.
06 Dec 2019
Sponsored: Sandra Karlsson, head of DGF GoGreen Europe for DHL Global Forwarding, discusses the significance of IMO 2020, the regulation's actual impact, consumer expectations, and exciting decarbonization options available to shippers.
29 Nov 2019
Rates on Asia trades to the US and Europe rose strongly this week, an encouraging sign for carriers that are about to start applying low-sulfur fuel surcharges on spot cargo.
18 Nov 2019
Most major carriers and some freight forwarders have announced their own bunker adjustment factor (BAF) formulas to offset higher fuel costs, but there is little commonality in pricing or even what they are called.
15 Nov 2019
The industry’s pivot to scrubbers is a gambit not just in that it hinges on high-sulfur bunker fuel prices staying significantly lower than low-sulfur fuels, but that regulators won’t further restrict scrubbers as environmentalists raise alarms.
12 Nov 2019
The latest Toepfer Multipurpose Index shows the project and breakbulk sector holding its breath as the effects of IMO 2020 begin to play out.
06 Nov 2019
As expected, greater clarity is emerging around the low-sulfur surcharge and how it will apply to shippers in cost-per-container terms as carriers get ready to queue up at the pumps.
06 Nov 2019
Carriers that do not have a significant number of their vessels equipped with scrubbers could be at a cost disadvantage as shipping prepares to comply with the IMO 2020 sulfur cap.
05 Nov 2019
Sponsored: What keeps shippers up at night? Kuehne + Nagel's EVP Otto Schacht discusses customer concerns around fuel pricing and availability with the approaching IMO 2020 low-sulfur regulation, freight rate market fluctuations, the future of contracting, and the e-commerce impact on predictability expectations.
01 Nov 2019
Carriers do not plan on carrying any of the costs of complying with the IMO 2020 low-sulfur fuel regulations, and will levy a surcharge on spot rates and shorter contracts.
01 Nov 2019
Bill Keyes, global logistics director of operations, Fluor on trade tensions and IMO2020 pricing risks, questions for the EPC (engineering, procurement, construction) side of the freight transportation business.
31 Oct 2019
Hapag-Lloyd will introduce an interim fuel surcharge to cover the volatile transition period as the carrier switch over to low-sulfur fuel in December.
Trans-Pacific spot rates stabilize ahead of projected import bump
25 Oct 2019
Spot rates on the eastbound Pacific stabilized as carriers prepare for a possible spike in imports from China next month ahead of the next round of tariffs scheduled to take effect Dec. 15 in US-China trade war.
16 Oct 2019
Full scrubber-equipped strings on the Asia-Europe trade may give their carrier operators a competitive advantage over other shipping companies using higher-priced low-sulfur fuel.
Port of Tampa CEO
11 Oct 2019
Port Tampa Bay President and CEO Paul Anderson on the geopolitical factors at play in the looming deadline for the Intern
09 Oct 2019
Container shipping rates are set to climb amid more balanced growth between cargo demand and vessel supply, while fuel costs will rise as carriers switch to low sulfur fuels to comply with the International Maritime Organization's tougher emission controls from January 2020.
01 Oct 2019
The creation of a coalition — supported by more than 70 public and private organizations including Maersk, Royal Dutch Shell, and Lloyd’s Register — to drive commercial efforts to decarbonize international shipping is the latest example of an industry beginning to grasp the Herculean tests that lie ahead
23 Sep 2019
Bold new emissions-cutting initiatives are being announced almost weekly as global impetus builds in the campaign to cut out carbon from international shipping.
17 Sep 2019
Trucking executives aren’t as worried about the impact of the IMO 2020 low-sulfur rule as they are about pending US regulatory changes that will more directly affect the sector.
17 Sep 2019
Maersk has “seen an understanding from the vast majority of customers” that they’ll need to pay higher fuel surcharges due to the IMO low-sulfur mandate, which will cost the container shipping industry $10 billion to $15.7 billion more annually, according to various estimates
10 Sep 2019
Shippers on the Asia-Europe trades are starting to see how container shipping’s switch to low-sulfur fuel will impact their freight rates.

Commentary

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