IMO 2020 supply chain disruption of greater concern than costs say shippers

Most shippers appear to be more concerned about the impact IMO 2020 sulphur regulations will have on the supply chain than the increased costs because of it, according to a report from The Loadstar.

Several shippers and forwarding agents told The Loadstar at Multimodal in Birmingham that they were more concerned about the potential negative impact of IMO 2020 on their supply chains, rather than the prospect of additional surcharges.

One shipper reportedly said that his main carrier from Asia had advised him to book early for shipments in the fourth quarter as many of its vessels will be in dry-dock having scrubbers fitted.

Panalpina agrees that there is “considerable potential for supply chain disruption” due to “delays in fuel supply, denied port calls and retrofitting” of scrubbers, according to a note it sent out to customers.

“The regulators have laid out the rules, but the path for shipowners, operators and carriers to complying with the low sulphur limit remains rocky,” said Panalpina.

The forwarder said it was expecting extra costs from carriers to start filtering through at the end of Q3, as the shipping lines start to replenish their vessels with the more expensive low-sulphur fuel.

International business development executive Aliona Yurlova, of iContainers, said: “There is an expected 15-20% increase in rates and up to a 10% decrease in capacity.”

All of this, according to the online digital freight forwarder, will leave the “maritime industry… shaken for at least a year following the implementation of the IMO 2020 regulation”.

The firm said “many shippers remain unaware and unprepared to deal with [IMO 2020] consequences”, which it suggested would lead to “a higher risk of cargo getting rolled over at origin and a severe capacity shortage”.

Yurlova says freight forwarders should begin factoring in three to four week cushions in shipments to ensure that supply chains are not disrupted if cargo gets rolled over.