Looming IMO 2020: Are We Ready? Know how technology could be saviour for Sea Liners

IMO Blog By Ajay Tewari

Being on ship as Ex-merchant shipping officer I know shipping is the lifeblood of the global economy and ships are the neurons, which carry global trade. Over 90% of global trade happens on oceans and we are less than six months away from possibly the biggest shipping shake-Up, regulatory (IMO 2020) which will contrarily affect complete supply chain system of the global economy.

“Estimates vary but it is believed that the IMO’s regulations will cost the shipping industry between $60 – 200 billion.” Source: Port Tech

United Nations shipping agency, the International Maritime Organization (IMO) planning to come with regulation whose main agenda will affect shipping industry, as from 1 January 2020, ships will have to use bunker fuel with a sulphur content of no more than 0.50% m/m under regulation 14.1.3 of Annex VI of the MARPOL convention (the “Regulation”). The non-compliant vessels will be subject to financial penalties, which will vary as per the Port States.

The focus of IMO 2020 to reduce SOx (Sulphur Oxide, which is a greenhouse gas) produced from a ship’s consumption of bunker fuel.

In fact, the “15 largest ships in the world produce more sulphur emissions than all of the world’s cars combined”. (Source: Guardian)

What Sea Liners Must Know?

  1. Reporting on fuel oil quality and availability?
  2. Exhaust gas cleaning systems (EGCS “Scrubber”) availability with IMO standards?
  3. Sulphur monitoring sampling and testing service providers (Sulphur content testing Labs)?

How Technology could be a saviour?

Looming IMO 2020 making Ship liners to have a smooth business flow and need for a globally integrated shipping information system (GISIS) is realized, where businesses can view all stake holder’s data and it’s reporting. Information related to fuel oil availability, EGCS systems, and Labs testing service for the understanding of the 0.50 % m/m sulphur limit under MARPOL Annex VI and abidance.

Pre-IMO 2020 work in progress

A. Desulfurization: International Ultrasonic Technologies Inc CEO Kerri McGrath confirmed that they are ready with advanced technology to make bunker oil (HSFO) exhausted gas to comply with IMO guidelines.

B. Marine fuel additives: Innospec Inc. has launched an exciting new range of marine fuel additives. These additives will make bunker oil comply with the new regulations regarding maximum sulphur content, which comes into force on January 1st, 2020.

C. Low-sulphur fuel oil (LSFO): Using high-grade fuel compliant is a short term solution for marine liners where many refinery planners, this means a terrific opportunity to make money for the company.

D. Carbon Neutral vessels: The world’s biggest carrier A.P. Moeller-Maersk announced plans to go above and beyond complying with the IMO’s 2020 rules when it set a target of having carbon neutral vessels on the seas by 2030.

IMO 2020 and Surge in Freight Price

Comply with new IMO regulation shipping industry have two options. One using low sulphur compliant fuel and other using open-loop scrubber system. Processing Bunker (Marine Fuel Oil) requires refineries to put more efforts it will result in costlier fuel price and directly impact freight price. Even implementing loop Scrubber will be a temporary and costly affair. Bottom line, ocean transportation is about to get more expensive in 2020.

As per Goldman Sachs: Full compliance scenario, $240 billion extra burdens will come to the shipping industry. Daily bunker fuel is nearly 3.5 million barrels per day in 2018, representing roughly 5% of total global fuel demand.

Technology as a captain for your ship

Shipping industry planning for Internet of Things (IoT) based digital platform for sea liner services gives shippers insights into how every vessel carrying their goods will comply with the IMO 2020 regulation. Such IoT applications can alone benefit over 94,000 big vessels according to the united nation.

Tech-Driven Assets Information & Optimization: 2019 will be dominated by the shipping industry’s preparations for January 1, 2020. It has already inspired a raft of technological innovations which could become fixtures of the sector for years to come. Sea liners moving towards “integrated shipping information system” (ISIS) and to comply with looming IMO 2020 regulation. New tech Consulting companies coming forward and developing IIS focused on reporting, heat map based available labs, scrubbers service, LFSO details and of available assets for their vessel fleet and freight management solution post IMO.

Integrated shipping information systems could be a one game-changer specifically for small and medium-size shipping liners and can act as a captain on the ship for sea liners in managing their fleet, freight and bunker management.