With 2020 finally here, global shipping services are starting to execute their ocean transportation plans for the new year. Most are ready to face new challenges and grab opportunities that lay ahead. The most prominent of 2020’s trends is IMO’s newly designed standards. 

IMO 2020

The International Maritime Organization (IMO) issued new emission standards that took effect on January 1st, 2020. These standards concern a fundamental and drastic change regarding the regulation of low sulfur emission and are designed to significantly decrease pollution produced by trade ships. This regulation demands the limit for sulfur in fuel oil used onboard ships operating outside designated emission control areas must go from 3.50% m/m (mass by mass) to 0.50% m/m. Consequently, ocean container carriers will need to invest in new technology as well as lowering the use of sulfur marine gas oil or use LNG (Liquid Natural Gas) as an alternative. 

In addition, refineries are blending fuel oils that have both high and low sulfur contents to achieve suitable fuel oil. These investments will impact the whole industry as they warrant a great increase in transportation costs for all ocean container carriers and thus an increase in the variability on bunker costs. This will pressure ocean container carriers to utilize the floating bunker that was introduced in 2019 to take both bunker fluctuations as well as low sulfur oil prices into consideration when they quote rates. 

Global shipping developments

For the U.S., the 2020 forecasts are supported by relatively stable economic conditions, both on the consumer level and on the industrial scale. The effects of the trade dispute between China and the U.S have been felt by both economies. This conflict can have a significant impact on the global gross domestic product. 

In example the logistics industry is still recovering from the plummeting sales growth that started in the fourth quarter of 2018, as is stated in a report by the IMF. The good news is that Phase One of the new US / China Trade Deal which was signed yesterday is already having a positive effect on the US markets.

In our opinion, IMO 2020 will have a significant impact on the freight market. These regulations will trickle down in higher costs for the final consumer, as well as sometimes confusing surcharges. Global shipping developments will also be affected as China and U.S continue their trade war, but currently both countries have stable economic conditions. RTM Lines specializes in global ocean transportation of heavy and over-dimensional project cargo, as well as the general break bulk, ro-ro and container cargo. For more information and resources about current events, tips and tricks for ocean transportation, and more, visit our resources page.