04OCT2019 - NEWS - New environmental rules reshape global shipping

The global shipping industry emits 18% of all air pollutants. New regulations will lower the allowed sulphur exhaust of ships from the current maximum of 3.5% to 0.5% from 1 January 2020 onwards. This has major consequences for the global shipping industry

Analysts expect that 4,000 ships of the global merchant fleet will try to comply with the new regulations by fitting scrubbers by 1 January 2020 and about 5,500 ships by the end of 2020 (approximately 6% of the world fleet by vessel count). this will mostly be among the largest ship types.

The majority of ships and in particular smaller ships are expected to switch to low sulphur fuels. The expected rise in prices for containerised shipping is up to 25%, assuming that the rise in fuel costs is fully passed on in higher shipping tariffs. If not fully priced on, competition and overcapacity may incentivise shippers to reduce speed to save on fuel costs. This will cut shipping capacity.