IMO 2020: Impact on Domestic Freight Transportation in North America

The International Maritime Organization (IMO) Marpol Annex VI (“Prevention of AirPollution from Ships”) regulations are set to limit sulfur content of bunker fuel in 2020.The associated cost will make imports and offshoring more expensive. Here are some details you need to know:

  • 1/1/2020: IMO limit sulfur content of bunker fuel to 0.5% (down from 3.5%)
  • IMO 2020 consumer impact: ~ +$240 billion
  • Increased Shipping Cost: +$40 billion
  • Single Vessel Shipping Cost Example: 150 tons/day and 200 days/year at sea = + $7 million/yearr in operating costs
  • Fuel cost impact: +59%
  • Fuel Cost Example: was $394.00/ton. | low-sulfur MGO $625.50/ton, + $231.50/ton increase
  • Slower steaming will lower cost impact but lengthen transit time affecting supply chains, inventory planning, distribution operations and inland transportation making near-shoring and reshoring more attractive.
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    Source: Logistics Management, “IMO 2020 IS COMING TO TOWN, Will Spiking Cost of Fuel Cause You Pain?, THE IMPACT ON THE COST OF DOMESTIC FREIGHT TRANSPORTATION IN NORTH AMERICA”, 2019

    IMO effects on reshoring and offshoring

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