Shipping Cost Increase from 1 Jan 2020

Changes to marine fuel regulations will increase the cost of all shipping – including shipping vehicles from Japan to Australia – from the 1st January 2020.

This is expected to increase the shipping cost by about $150 AUD per vehicle.

Below details are provided courtesy of Dolphin Shipping and the International Marine Organisation (IMO).

The IMO is implementing a new regulation (IMO2020) to reduce the air pollution & environmental impact of global shipping by limiting the sulphur content in marine fuels from the 1st January 2020.

The new regulation will limit the sulphur content in marine fuels to 0.5 % m/m (mass by mass), reduced from 3.5 % m/m in IFO 380 Bunker Fuel that the ships are currently using.

This is estimated to result in a 77% reduction in overall SOx (sulphur oxides) emissions from ships (or an annual reduction of approx. 8.5 million metric tonnes of SOx).

Cutting sulphur emissions is critical to help prevent acid rain which in turn:

– reduces ocean acidification

– reduces damage to crops, forests and aquatic species

– reduces human health effects such as stroke, asthma, cardiovascular disease, lung cancer and pulmonary disease

There are two main options the shipping lines can use to comply with the new regulations.

One is to use the compliant fuel which has a sulphur content of 0.5 % m/m, although in recent years there has been a shortage of this better quality of fuel and it is more expensive.

The second option is to fit “scrubbers” to the smoke stacks of ships which actively remove the sulphur from the exhaust, allowing continued use of the current IFO 380 Bunker Fuel.

Unfortunately both options will mean an increase in the cost of shipping not only for the automotive industry but across all industries that rely on shipping globally.

A third option would be to change to an alternative fuel such as LNG (natural gas) or methanol, but this would require very expensive retrofitting together with other logistical issues.

We expect we will start seeing increases in shipping costs from late November 2019 onwards.