This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
As we face a changing environment for shippers, perhaps the most impactful change will be carrier compliance with the IMO 2020 mandate to dramatically cut emissions. I think, along with the generations that will succeed, this is the single most important issue we must deal with for the future of the planet.
Carriers have opted to deal with this by either using low-sulfur fuel or installing emission scrubbers. Everyone who had paid attention to this development knows what the issues are; hopefully these solutions will meet the IMO emission requirements.
Questions that US exporters and imports have: Will there be enough low-sulfur fuel to meet the needs come Jan. 1? What will the costs be of the new fuels? For scrubber-equipped vessels, will they all be closed systems and capture the dirty emissions? Will that capture be dealt with properly — i.e., no “magic pipes”? What will the monetary cost associated with this be? How will that cost impact the carriers and their customers and ultimately the end user or consumer? How will that cost be translated to value?
As I am writing this, there still is no clear idea of the costs of the new fuels yet. We have been told time and time again that the carriers are in no position to absorb the cost. The most telling quote that I recall concerning the cost impact is this: “In the end, the market will determine the cost.”
Perhaps we need to frame this a little differently. Users and providers all should ask, “Where does my responsibility rest in this struggle to maintain costs and deal with the issue of emission controls as they pertain to climate change?”
The cost of IMO 2020 compliance will impact every entity that moves cargo on our oceans. The responsibility rests with us all.