Keeping fuel costs within a predictable range protects you from unexpected changes in the price of fuel. Changes that could otherwise seriously impact your budget and profit margin.
The IMO (International Maritime Organization) has set new regulations into place 1 January 2020 to limit the sulphur oxide (SOx) emission of ships.
The limit of the sulphur content will be cut from currently 3,50% m/m (mass by mass) down to 0,50% m/m outside of designated emission control areas (ECAS). Within the ECAS the sulphur limit is 0,10% m/m and covers the Baltic Sea, the North Sea area, the North American area (designated coastal areas off Canada and the U.S.) and the United States Caribbean Sea area (around Puerto Rico and the United States Virgin Islands).
The regulations from the consumer's point of view
Ships must use oil with a low enough content of sulphur or marine gasoil (MGO) to meet the new regulations. This might lead to an abundance of 3.5% fuel oil, also called high Sulphur fuel oil (HSFO), which again will most likely cause the price to drop. This has already led the difference (spread) between HSFO and MGO to increase. The future development of the spread is at the moment uncertain. There are however opportunities:
For more information and the latest update on the matter, please click here.
There are many variables on how to solve the 2020 challenge and no doubt there will be things or elements of surprise that may come out of no where.
Working with suppliers that understand the challenge will be key to minimize disruptions during the transition and the first 12-24 months post implementation.
We are actively participating in industry forums and conferences to provide advocacy and represent views of customers and suppliers in support of a smooth implementation.