New IMO 2020 low-sulfur fuel regulations are a necessary but unwelcome burden for container shipping stakeholders, according to shipper representatives.
James Hookham, secretary-general of the Global Shippers Forum (GSF), said importers and exporters faced a wide range of challenges in the early part of this year as surcharges from shipping lines seeking to cover the cost of compliance with new IMO 2020 low-sulfur rules were implemented.
"With the container shipping industry in a trough of depression, the additional burden of complying with tough new rules on emissions from vessels is a necessary but unwelcome start to 2020," he said.
"The shipping industry has widely assumed that the costs of cleaning up its environmental act can simply be passed onto its customers (shippers) in the form of surcharges.
"Whether that will be the case will be the subject of individual negotiations over the coming months," Hookham said.
However, he added, shippers should be demanding clear and consistent explanations of any surcharges demanded. "GSF's ‘Top Ten Tips for Sulphur-Surcharged Shippers' reminds our members of the ground rules and to scrutinize carefully any surcharge demands made during contract negotiations," he said.
GSF's "Top Ten Tips for Sulphur-Surcharged Shippers" highlights the fundamentals of the new rules that all vessels are now required to meet in all parts of the world. But it also encourages shippers to challenge the basis of any surcharges to make sure they understand exactly what they are being asked to pay extra for — and whether it can be properly explained and justified by carriers.
"Ultimately, the industry needs to move on to a more mature pricing regime with confidential contracting and all-inclusive charges becoming the ‘new normal,'" said Hookham.
"The shipping industry needs to wean itself off surcharges, just as much as it does high-sulfur fuels."
According to Hookham, in 2020 the environmental performance of the shipping industry will come under intense scrutiny in the world's regulatory forums.
"The IMO low-sulfur fuel regulation will be followed by crucial meetings on reducing greenhouse gas emissions and shipping's carbon footprint," he added.
"The industry needs to demonstrate a responsible attitude to meeting the costs of its environmental responsibilities to retain the confidence of customers and regulators."