FREIGHT MAY RISE WITH NEW RULE FOR SEA FUEL

In less than two weeks, thousands of ships will be forced to use lower sulfur fuel to comply with global rules set by the International Maritime Organization (IMO). Anyone who fails to comply is subject to penalties and even imprisonment. Ports are using drones to sniff out violators (literally). Regulations are profoundly affecting oil refineries and the cost of sea freight should rise. And why so much commotion? For decades, the shipping industry has been used by the oil market to dump a pollutant accused of harming human health (aggravating asthma, for example) and causing acid rain. Still, the arrival of the regulations in October 2016 shocked many people who expected later adoption. There is not so much panic over preparations, but there is still a lot of work ahead, as demonstrated by the drop in fuel prices that do not fit the new rules. “IMO 2020 is the most fundamental and dramatic change in product specification the oil industry has ever experienced, impacting shipping and refining,” said Torbjorn Tornqvist, president of Gunvor Group, one of the leaders in oil and gas trading. . “It has the potential to change every oil product and differential in the square.” The cost of shipping a container from Latin America to Europe could increase by $ 26, according to HIS Markit. The cost of a weeklong cruise could go up to $ 130 per cabin, the consultancy estimates. It is still early to know which refineries will benefit or suffer the most because thousands of variables influence the profits of these operations. Safety: The shipping industry has consistently warned of safety concerns in the rules, but no single standard yet. Should the new fuel simply have certain properties? including sulfur content and other important metrics? not exceeding the specified levels. Impact on Trade:
The transition already has an impact on maritime logistics. In Singapore, the world’s largest refueling center, ships have to wait longer than usual for fuel, and the Gibraltar government warns of a lack of refueling vessels. “There will certainly be disruption and will create some supply chain bottlenecks in the beginning as well as logistical constraints when it comes to obtaining marine fuels,” warns Robert Hvide Macleod, president of Frontline’s management division, which has one of the world’s largest fleets. Big ships. Fuel represents the largest expense of shipping and the new types are being negotiated at a premium of several hundred dollars per tonne over the old product. Therefore, the cost of sea freight may rise if there is room for transfer. “I think we will see its impact on global trade in terms of waiting days and rising costs,” said Sadan Kaptanoglu, president of BIMCO, the world’s largest shipping association. “There may even be chaos in extreme situations where lack of fuel delays the delivery of cargo and non-framed ships are punished by ports or involved in lawsuits.”
Source: Portos e Navios