Online freight forwarder iContainers says the maritime industry will be left ‘shaken’ for at least a year following the implementation of the IMO (International Maritime Organization) 2020 regulation.
The new rule, which will come into effect on 1 January, 2020 requires sulphur oxide emissions from maritime vessels to be reduced from the current 3.5% m/m to 0.5% m/m.
Because of the costly compliance process, which is estimated to cost between $10 and $15 billion annually, carriers and shipowners are shifting a big part of this increase in operational and fuel costs to their customers - the shippers.
Aliona Yurlova, expert in international business development at iContainers said, “The immediate impact will be much higher surcharges. More specifically, expect the Bunker Adjustment Factor (BAF) to be significantly higher in the first 12 to 18 months.”
“There is also an expected 15-20% increase in rates and up to a 10% decrease in capacity, which will leave the maritime market quite shaken for at least the initial year.”
Despite it being one of the most important regulations in maritime history and one that will have far-ranging impacts across industries, many shippers remain unaware and unprepared to deal with its consequences.
The IMO 2020 regulation will reign in a new era in shipping. Given the uncertainties that remain surrounding operations and costs, freight forwarders should be prepared to take on the role of a consultant for shippers.
Aliona Yurlova’s advice for shippers is to plan their shipments earlier than they usually do to avoid problems. For example, if a two-week cushion is the minimum required period of time for them to ensure a shipment goes smoothly, shippers should now consider planning a shipment three or even four weeks in advance to avoid additional charges and their containers from getting rolled.