New EU Regulation and IMO 2020 Sulphur Cap Leads to Ferry Increase

For anyone who works in the logistics industry, from fleet managers and freight forwarders, to hauliers and those who make a living doing courier jobs, the IMO (International Maritime Organisation) 2020 sulphur cap is set to have ramifications on costs and feasibility.

Even if you don’t travel outside the UK for your courier jobs, there’s little doubt you’ll be affected indirectly, so it’s important to understand what it’s all about. 

In 2015, the European Union and International Maritime Organisation issued a directive requiring ferry companies to lower the sulphur percentage in fuel from 1%, to 0.1%, with a view to decreasing their carbon footprint and, ultimately, helping to improve air quality in Europe. (The directive affected areas including the English Channel, North Sea and Baltic Sea regions.)

Because ferries had to make significant changes to their fuel systems in order to comply with these new regulations, the ferry companies were left with little choice but to pass the additional costs onto their customers.

This scenario is about to be repeated with the IMO 2020 sulphur cap, which is set to come into effect in January 2020. The global environmental regulation is designed to significantly reduce the sulphur content of fuel used by ships to no more than 0.5%.

As with the previous EU directive in 2015, ferry and ship operators have several alternatives to reach compliance, all of which are costly and the results are not entirely clear. What is clear, however, is that, once again, the costs will necessarily have to be passed on through the supply chain. The options are:

Investing in new engines or ships with dedicated technology.

Switching to a more expensive reduced sulphur fuel.

“Scrubbers” can be fitted to clean the output gasses: these are similar to a catalytic converter in a car. This system cleans the gasses generated by the engines, which enables the ships to continue burning lower grade fuel with far lower sulphur output levels. The scrubbers are retro fitted, but are extremely expensive (a cost of around €5 million per ship) and are not compatible with all vessels.

The final option is to burn cleaner fuel – Marine Gas Oil (MGO) instead of heavy fuel oil (equivalent of super unleaded for cars), which is much more expensive.

For anyone undertaking courier jobs, whether in the UK or beyond, this environmental regulation will have long term and far-reaching effects as shipping companies adjust their business strategies. For freight forwarders, the costs that are passed on for the transportation of goods will be reflected in their own operational practices, which will affect how they buy and manage their road capacity.

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