#Carriage Ban for Fuels Non-compliant with IMO 2020 Comes into Force# By SN Panigrahi, Essenpee Business Solutions, About International Maritime Organization (IMO), International Maritime Organization (IMO) Number, Cleaner Air in 2020, How can vessel operators comply with the IMO 2020 regulation?, What Does IMO 2020 Go into Effect?, What is the "carriage ban" and how does it work?, What must ships do to meet the new IMO regulations?, IMO is not Responsible for Enforcing their Policies,Regulatory Impact of IMO 2020, Cost Impacts

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SN Panigrahi is a Versatile Practitioner, Strategist, Energetic Coach, Learning Enabler.
He is an International-Corporate Trainer, Mentor & Author – PMP Trainer
He has diverse experience and expertise in Project Management, Contract
Management, Supply Chain Management, Procurement, Strategic
Sourcing, Global Sourcing, Logistics, Exports & Imports, Indirect Taxes –
GST etc.
He had done more than 150 Workshops on above
Published more than 500 Articles; More than 60 YouTube
Presentations & More than 70 SlideShares
He is an Engineer + MBA +PGD ISO 9000 / TQM with around 29 Yrs of
Experience
He is a certified PMP® from PMI (USA) and become PMI India
Champion
Also a Certified Lean Six Sigma Green Belt from Exemplar Global
Trained in COD for 31/2 Yrs. on Strategy & Leadership
GST Certified – MSME – Tech. Dev. Centre (Govt of India Organization)
ZED Consultant – Certified by QCI – MSME (Govt of India Organization)
Member Board of Studies, IIMM
Co-Chairman, Indirect Tax Committee, FTAPCCI
Empanelled Faculty in NI MSME
He has shared his domain expertise in various forums as a speaker & presented a number of papers in various national and
international public forums and received a number of awards for his writings and contribution to business thoughts.
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com
Hyderabad

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Carriage Ban for Fuels Non-compliant
with IMO 2020 Comes into Force

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The International Maritime Organization is an agency tasked with
improving the security and safety of international shipping. One of
its key duties is to devise strategies and measures to keep the
waterways clean by preventing marine pollution from ships.
International Maritime Organization (IMO) is an agency of the
United Nations which has been formed to promote maritime safety.
... IMO ship pollution rules are contained in the “International
Convention on the Prevention of Pollution from Ships”, known
as MARPOL 73/78.

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About International Maritime Organization (IMO)
 It was established by UN convention in Geneva on 17 March 1948 and
met for the first time in January 1959.
 IMO is responsible for measures to improve the safety and security of
international shipping and to prevent pollution from ships.
 It is also involved in legal matters, including liability and compensation
issues and the facilitation of international maritime traffic
 It currently has 174 Member States. India joined in 1959.

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International Maritime Organization (IMO) Number
The International Maritime Organization (IMO) number is a unique identifier for ships, registered ship owners and
management companies. IMO numbers were introduced to improve maritime safety and security and to reduce
maritime fraud. The International Maritime Organization (IMO) number is a unique identifier for ships and for
registered ship management companies. For ships, it consists of the three letters "IMO" followed by the seven-
digit number assigned to all ships by IHS Fairplay constructed.
3 key IMO conventions
Majority of conventions adopted by IMO usually fall into three main categories –
1. Maritime Safety,
2. Prevention of Marine Pollution, and
3. Liability and Compensation, especially in Relation to Damage Caused by Pollution.

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Global Marine Fuels Report
The main type of “bunker” oil for ships is heavy fuel oil, derived as a residue from crude oil distillation. Crude
oil contains sulphur which, following combustion in the engine, ends up in ship emissions. Sulphur oxides
(SOx) are known to be harmful to human health, causing respiratory symptoms and lung disease. In the
atmosphere, SOx can lead to acid rain, which can harm crops, forests and aquatic species, and contributes to
the acidification of the oceans.
Limiting SOx emissions from ships will improve air quality and protects the environment.
IMO regulations to reduce sulphur oxides (SOx) emissions from ships first came into force in 2005, under
Annex VI of the International Convention for the Prevention of Pollution from Ships (known as the MARPOL
Convention). Since then, the limits on sulphur oxides have been progressively tightened.
From 1 January 2020, the limit for sulphur in fuel oil used on board ships operating outside
designated emission control areas is reduced to 0.50% m/m (mass by mass). This will significantly
reduce the amount of sulphur oxides emanating from ships and should have major health and environmental
benefits for the world, particularly for populations living close to ports and coasts.
The International Maritime Organisation (IMO) has ruled that from 1 January 2020, marine sector emissions in
international waters be slashed. The marine sector will have to reduce sulphur emissions by over 80% by switching to lower
sulphur fuels.
Cleaner Air in 2020: 0.5% sulphur cap for ships enters into force worldwide. From 1 January 2020, the
maximum sulphur content of marine fuels is reduced to 0.5% (down from 3.5%) globally – reducing air
pollution and protecting health and the environment.

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How can vessel operators comply with the IMO 2020 regulation?
1. Use Scrubbers. They can use Scrubbers (emission cleaning technology) to
remove pollutants from the ship's exhaust, which allows them to continue
using higher-sulphur fuels. ...
2. Switch to non-petroleum-based fuels. ...
3. Switch to a Very Low Sulphur Fuel (VLSF) or MGO.
The move to lower sulfur content allows for the application of advanced emissions
control technologies that substantially lower the harmful emissions from diesel
combustion.
MGO (Marine gas oil) - roughly equivalent to No. 2 fuel oil, made from distillate
only. MDO (Marine diesel oil) - A blend of heavy gasoil that may contain very
small amounts of black refinery feed stocks, but has a low viscosity up to 12 cSt
so it need not be heated for use in internal combustion engines.

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What Does IMO 2020 Go into Effect?
The IMO 2020 regulations specifying 0.50% sulphur emissions will go into effect on January 1, 2020.
Individual countries that are party to MARPOL Annex VI are responsible for monitoring, compliance, and
enforcement of the new regulations.
March 1 was the second key date in IMO 2020 with carriage ban for non-compliant fuel unless the
vessel is fitted with a scrubber coming into force.
The amendment to the International Convention for the Prevention of Pollution form ships (MARPOL) sits
alongside the 0.5% global low sulphur cap and prohibits the carriage of non-compliant fuel oil fuel by ships
for the purposes of propulsion. The only exception is for vessels fitted with scrubbers.
IMO 2020 came into force on 1 January with the majority of owners opting to use compliant very low sulphur
fuel oils or marine gas oil and a much smaller percentage choosing to install scrubbers or run vessels on
alternative fuels such as LNG.
The regulation will apply globally and throughout the industry to fuels used in the open sea. It will
affect vessel operators, refineries, and global oil markets. In the Environmental Control Areas (ECA
zones) an even stricter regulation remains, limiting the sulphur content to 0.1%.’

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Does the sulphur limit apply only to ships on international voyages?
​The sulphur oxides regulation (MARPOL Annex VI, regulation 14) applies to all ships, whether they are on
international voyages, between two or more countries; or domestic voyages, solely within the waters of a Party
to the MARPOL Annex.
What is the "carriage ban" and how does it work?
​The carriage ban refers to the MARPOL amendment adopted in 2018 to prohibit the carriage of non-compliant
fuel oil for combustion purposes for propulsion or operation on board a ship - unless the ship has an exhaust gas
cleaning system ("scrubber") fitted.
The amendment is intended as an additional measure to support consistent implementation and compliance and
provide a means for effective enforcement by States, particularly port State control.
The specific provision requires that fuel oil used on board ships shall not exceed 0.50% sulphur limit. The
amended provision to prohibit the carriage of non-compliant fuel oil reads as follows: "The sulphur content of fuel
oil used or carried for use on board a ship shall not exceed 0.50% m/m."
So, carriage of fuel oil for use on board ships will be prohibited from 1 March 2020 if the sulphur content
exceeds 0.50%.
Regulation 2.9 of MARPOL Annex VI provides the definition for 'fuel oil' - "Fuel oil means any fuel delivered to
and intended for combustion purposes for propulsion or operation on board a ship, including gas, distillate and
residual fuels."
The provision does not apply to fuel oil being carried as cargo.

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What must ships do to meet the new IMO regulations?
The IMO MARPOL regulations limit the sulphur content in fuel oil. So ships need to use fuel oil which is
inherently low enough in sulphur, in order to meet IMO requirements.
Refineries may blend fuel oil with a high (non-compliant) sulphur content with fuel oil with a sulphur content
lower than the required sulphur content to achieve a compliant fuel oil. Additives may be added to enhance
other properties, such as lubricity.
Some ships limit the air pollutants by installing exhaust gas cleaning systems, also known as “scrubbers”.
This is accepted by flag States as an alternative means to meet the sulphur limit requirement. These
scrubbers are designed to remove sulphur oxides from the ship’s engine and boiler exhaust gases. So a
ship fitted with a scrubber can use heavy fuel oil, since the sulphur oxides emissions will be reduced to a
level equivalent to the required fuel oil sulphur limit.
Ships can have engines which can use different fuels, which may contain low or zero sulphur. For example,
liquefied natural gas, or biofuels.

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IMO is not Responsible for Enforcing their Policies
 The IMO is not responsible for enforcing its policies. There is no enforcement
mechanism to implement the policies of the IMO.
 The IMO, like any other UN agency, is primarily a secretariat, which facilitates
decision-making processes on all maritime matters through meetings of
member states.
 The binding instruments are brought in through the conventions — to which
member states sign on to for compliance
The Port State Control of the respective state is responsible. They will check
logbooks, use sniffer devices and sniffer drones.
What will the Fine if a Carrier does not Comply with IMO 2020?
Depending on the jurisdiction, the penalties are high fines, ship arrest or even
imprisonment of the captain.

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Regulatory Impact of IMO 2020
IMO 2020 compliance requires a massive change that will demand rapid adjustments across the
global fuel supply chain to comply with the 1 January 2020 deadline. The landmark decision by
the International Maritime Organization already has begun to exact far-reaching consequences
on shipping company operating costs, global freight rates, shipping economics, scrubber
demand, accelerated ship scrappage and more
The prospect of IMO 2020 has resulted in a high level of uncertainty about availability of
petroleum products and prices. It is currently not possible to indicate an accurate future price level
for IMO 2020 compliant fuels, as prices are affected by several factors. In particular, geopolitical
events such as sanctions and war, the actions of OPEC (Organisation of the Petroleum Exporting
Countries) and the general demand of the world economy for oil influence the price of crude oil
and ultimately the price of fuel products. The IMO 2020 regulation will have another significant
effect in addition to the regular volatility of global oil prices.

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Cost Impacts
According to current calculations, the expected increase in costs will have a significant impact
on the overall prices of container transportation and on freight rates. Whilst the implementation
date for IMO 2020 is January 1st 2020, freight rates increase is already seen. Long-term
agreements for both full and part load containers will include a price adjustment method also
known as Bunker Adjustment Factor (BAF). With each line having its own variation on a basic
formula Bunker Adjustment Factor (BAF), covering a range of areas including fuel price,
ship size and trade, Container lines are facing growing pressure to standardise
surcharges, which have become ever more complicated with the introduction of IMO
2020.
The lack of transparency and standardisation of those variables is a constant irritant to
shippers, freight forwarders, and non-vessel-operating common carriers (NVOCCs) and
gives rise to the suspicion that some carriers are using the BAF as a revenue-raising tool
as well as a cost-recovery and risk-sharing mechanism. Ultimately all these Cost are
born by the Shippers (Exporters / Importers) there by increasing the Cost of Trading.

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SN Panigrahi

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18. Contact Details:
SN Panigrahi
9652571117
snpanigrahi1963@gmail.com 18