New marine regulations could impact supply chains without proper planning
The International Maritime Organization (IMO) 2020 Regulations, which cut the maximum allowable sulphur content in fuel by more than 85%, officially come into force on 1st January, but could start to impact operations as early as Quarter 4 this year.
Graham Little, managing director of Evolution Time Critical, explained: “While there may be some impact on transport costs, more important is the potential impact on arrival dates in port. This is crucial to the integrity of the automotive supply chain, where ‘just in time’ delivery is so often the norm – so anything which could cause a delay has to be mitigated against.”
He continued: “Carriers have various options in order to comply with the Regulations. Their first option is to buy ‘greener’ fuels – a cost which will end up being passed on to shippers. However, the Regulations also state that from 1st March, ships that continue to run on heavy oil must be fitted with exhaust gas cleaning systems, also known as ‘scrubbers’.
“In these instances, the ships will be unavailable while the installation takes place, impacting on overall space availability. Carriers could start taking some of their ships out of service for this purpose over the next few months to ensure their full fleet is compliant from January. Finally, to conserve fuel, we may see an increase in the practice of ‘slow steaming’, whereby ships travel at a lower speed than normal.”
Graham Little says this last point is particularly important for automotive consignments, as not only will it impact on capacity – with fewer journeys able to be made within the same time – but delays to arrival in port could result where ‘slow steaming’ is employed.
He continued: “The introduction of IMO 2020 will inevitably create challenges, especially in the early stages, and places an onus on OEMs and their Tier suppliers to retain a strong overview of their supply chains for ‘standard’ logistics. They will need to ensure that capacity is going to be available when they need it, avoiding the risk of ‘rolling over’ of consignments – and to be clear when ships are going to arrive in port, so that delivery schedules can be adhered to. What this exercise will likely reveal is that there may be gaps in provision which they will need to address.”
Little concluded that there may well be a grace period of ‘permitted noncompliance’ as carriers get their houses in order: “However, OEMs and Tier suppliers should adopt a planned approach now to countering any potential sea freight issues arising from IMO 2020 implementation, by consulting a specialist emergency logistics supplier who can harness the power of alternative transport modes and routes, to deliver agile and cost-effective solutions to meeting automotive production deadlines.”
