Carriers are still struggling to provide firm information on how they intend to handle the International Maritime Organization (IMO) mandate to reduce marine pollution effective January 1, 2020. In two months, vessels will be required to have sulfur emission levels less than 0.5%. The carriers have publicly stated that this new mandate will cost the container shipping industry between $10-$15 billion. What they have failed to clearly state is the cost impact the mandate will have on shippers effective January 1, 2020.
Shippers anticipated the fuel pricing strategy for each carrier to be announced on September 1, 2019 with an effective date of October 1, 2019. For reasons only known to the carriers, the anticipated fuel increases to offset the IMO mandate continues to be delayed. The majority of carriers have decided to delay announcing their fuel pricing strategies until December 1, 2019 allowing for an effective date of January 1, 2020.
There is clearly uncertainty by the carriers on how to address the IMO 2020 issue with shippers. Most of the carriers are still trying to determine the proper amount to charge their customers. Respected trade publications are estimating West Coast discharge cargo could see increases between $150-$250 per container while East Coast discharge cargo could see increases ranging between $200-$400 per container.
The uncertainty should not be construed as reluctance by the carriers to recoup the $10-$15 billion. Although there has been confusion surrounding the IMO 2020 mandate, shippers should be prepared for higher fuel costs to be implemented effective January 1, 2020.
