Westwood Shipping Lines: First Advisory to Shippers: International Maritime Organization Regulation Requires Ships to Use Low Sulphur Fuel by 2020

On January 1, 2020 all ocean-going ships must comply with the mandate of the International Maritime Organization (IMO) to reduce engine sulphur emissions from 3.5% to a maximum of 0.5%. This global fuel sulphur cap is part of the IMO’s response to heightened environmental and health concerns about the use of heavy fuel oil for ocean transportation. This advisory describes what this new sulphur fuel requirement will mean to both carrier and shipper.

Most of the world’s tens of thousands of ships will burn low sulphur fuel to meet this regulation rather than use alternate high cost technologies. This requires that the fuel tanks and fuel systems of these ships be cleaned and that certain changes be made to the engines and fuel pumps. From a technical stand-point, once a ship’s fuel tanks are cleaned, only fuel within the 0.5% sulphur limit can be stored in the fuel tanks.

Westwood Shipping Lines will use compliant fuel to meet the requirements of the regulation. Westwood will perform engine room modifications and fuel tank cleaning in the July/October 2019 time frame. This will require about three to four days in the shipyard for each ship. Upon completion each ship will operate on compliant fuel. If 0.5% of low sulphur fuel is not available when needed, WSL will need to use 0.1% sulphur fuel which is required within the North American Emissions Control Area (NAECA). Making these modifications during the summer months will ensure our fleet will meet the compliance deadline with minimal disruption to the schedule and service level that is so important to our customers.

At present 0.5% low sulphur fuel is not available, so the actual cost is as yet unknown. Some estimates are that it will cost 30% to 50% more than the bunker fuel presently in use. Due to this anticipated increase in fuel costs, Westwood must revise its bunker and fuel factor formulas. These will be finalized in the very near future and provided to you.

Westwood values your business and we will be happy to meet with you to discuss IMO 2020, our ship board compliance procedures, and to answer any questions you may have. We will also provide updates of our progress throughout the coming year.

We look forward to working with you as the global maritime transportation industry transitions to this new class of low sulphur fuel.

Guy C. Stephenson
President
WESTWOOD SHIPPING LINES, INC.