Dear Valued Client,

As of the 1st of January 2020, new International Maritime Organization's sulphur regulations (IMO 2020) will come into effect.

This will require ships to maintain a sulphur emissions limit of 0.5% mass by mass (as oppose to the current limit of 3.5%). To ensure this, shipping lines will need to guarantee that their fleets meet this through one of the below methods:
• Use low-sulphur fuel.
• Install scrubbers.
• Use liquefied natural gas (LNG).

With majority of shipping lines selecting the first option, it is forecasted that the increased demand of low-sulphur fuel will result in a sizeable fuel price rise of up to 50%, which will therefore increase shipping costs (as 60% of a ship's operating cost is fuel).

While shippers will not need to make any direct changes to their processes, we do advise that everyone be aware of and prepare for the coming prise increase as shipping lines have already begun making price adjustments by introducing or increasing charges to offset the forthcoming fuel or equipment costs.

Best regards,

Freight On Board International Services Pty Ltd.