Freight shipping costs are on the rise

The International Maritime Organization plans to enforce reduced emissions, which is expected to cost the shipping industry an estimated $60 billion.

• On January 1, 2020 the IMO (International Maritime Organization), in an effort to reduce the shipping industry’s greenhouse gas emissions by 50% from 2008 levels by 2050, will enforce a ban on ships using fuel that has a sulfur content of 0.5 percent or higher.

• Costs to reduce emissions from higher-sulfur fuel are between $1 million to $10 million per ship.

• Given the low level of readiness to comply, the global shipping industry will undergo a disruptive transition.

• Fuel prices will become volatile as purchasers pursue pricing advantages before the Jan. 1 deadline.

• Fuel bills for the shipping industry are estimated to rise an additional $60 billion.

• Some crude oil tankers could see a 25% increase in shipping costs resulting in higher oil/gas prices for consumers.

• Higher seaborne freight costs will raise prices for companies and households globally.

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Photo credit (plus a fascinating interactive map of international shipping routes):

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