The Global Availability of Safe, Compliant Marine Fuels

Cargo ship against big city skyline with world map overlay

The International Maritime Organization (IMO), the United Nations agency that regulates marine shipping standards, plans to reduce the maximum amount of sulfur in marine fuels from 3.5% to 0.5% by January 1st, 2020. These regulations on ship emissions are intended to reduce the amount of sulfur dioxide, a toxic pollutant, and other contaminants entering Earth’s atmosphere. Compliance with fuel regulations is enforced by the state or country where each ship is registered, but IMO is working with countries and shipping industry leaders across the globe to ease the large-scale transition to new fuels. However, the marine shipping industry has concerns about the global availability of low-sulfur fuels and the impact it will have on fuel prices.

Sulfur Dioxide’s Effect on Health and the Environment

Most ships use fuel derived from crude oil, which contains sulfur. Burning this fuel releases sulfur oxides (SOx), which are harmful to human health and can lead to respiratory infections, lung disease, itchy eyes, and trouble breathing. Sulfur emissions are also detrimental to the atmosphere, contributing to acid rain that can harm crops, forests, and marine animals.

In 2016, Finland submitted a study to IMO’s Marine Environment Protection Committee on the health impacts of sulfur oxide emissions from maritime shipping vessels—it’s estimated their SOx emissions would contribute to more than 570,000 additional premature deaths from air pollution worldwide between 2020-2025 if limitations aren’t enforced by next year. The new sulfur limits on fuel oil will significantly reduce the amount of sulfur oxides emitted by shipping vessels, and they’re expected to have major health and environmental benefits the world over, especially for citizens living close to ports.

What Limiting Sulfur Emissions Means for Marine Logistics

The marine logistics industry and vessel operators have a few options for complying with the new IMO sulfur limits. The most obvious solution is to switch to a low-sulfur fuel that complies with the new regulation—however, the widespread availability of acceptable fuels to use in marine engines is uncertain. Another option involves installing exhaust cleaning systems (also called “scrubbers”) to remove sulfur oxides from the ship’s engine and gas emissions, but installing scrubbers is expensive and can increase a ship’s operating costs. The marine industry also has the option to switch to nonpetroleum-based fuels, such as liquefied natural gas (LNG). While LNG is a clean fuel substitute, the infrastructure needed to support its widespread use is limited in availability and scale.

The limited availability of low-sulfur fuels is expected to increase the cost of compliant fuel costs, making marine transportation more expensive until another solution is widely available. While the marine logistics industry and its vessel operators have several options for dealing with new sulfur regulations, there must be an effort from oil refineries to drive global change. Refineries and the marine logistics industry must work together to create a long-term solution for increasing the supply of low-sulfur fuels and minimizing the output of hazardous emissions.

Global Shipping’s Ocean Freight Services

Global Shipping Services conducts all business in strict compliance with all applicable laws and regulations of the countries and jurisdictions involved. We’ll make sure your marine shipment arrives at its destination safely while abiding by the new fuel regulations. Our years of experience and expansive global network allow us to provide competitive shipping prices amidst fluctuating fuel costs. Contact us today to learn more about how we can help you ship marine cargo compliantly and efficiently.

U.S. Tariffs Over EU Aircraft Subsidies

model of Boeing aircraft 737 max

The ongoing dispute between the U.S. and the EU regarding illegal government aid to Boeing Co. and Airbus SE has once again come to a head under the World Trade Organization (WTO). The WTO revealed these two enterprises (the largest plane manufacturers in the world) received billions of dollars in unlawful subsidies, making this the largest corporate trade dispute in history. The U.S. administration is awaiting the WTO’s final accounting of the damages caused by the unlawful aid and is expected to impose retaliatory tariffs on European products and imports.

The U.S. published an initial list of proposed tariffs on April 12th, with an estimated trade value of $21 billion. Most recently, the United States requested an additional list of tariffs over EU aircraft subsidies and supplemental products to be reviewed by the WTO, valued at an additional $4 billion in import value. While the WTO has found the EU subsidies to be in violation of international trade rules, it has yet to reach a verdict regarding the amount of countermeasure enforceable by the U.S. The WTO is expected to announce its verdict this summer.

Imports Affected by Tariffs

The United States’ initial list of proposed tariffs targeted not only EU aircraft carriers and aircraft parts but also apparel, ceramics, kitchenware, and agricultural products like cherries, meat, and pasta. The latest list includes tariffs on other vital imports, such as grains, metal products, cast-iron tubes and pipes, dairy products (cheese, butter, and yogurt), olives, and certain types of whiskey.

Cheese is just one example of how tariffs on a single product can make a significant impact on trade. America is the EU’s largest buyer for cheese products, with 76% of U.S. cheese imports coming from Europe in 2018. If the estimated tariffs are implemented, the quantity of cheese imported to the U.S. could decrease by 7,000 to 10,000 tons per year.

Many U.S. industries oppose the proposed tariffs in fear they will negatively impact business and trade. The Distilled Spirits Council of the United States commented on the additional list of tariffs, saying, “U.S. companies—from farmers to suppliers to retailers—are already being negatively impacted by the imposition of retaliatory tariffs by key trading partners on certain U.S. distilled spirits … and these additional tariffs will only inflict further harm.” The United States Trade Representative (USTR) is accepting public comments on the supplemental list of tariffs, particularly regarding whether the additional list could adversely affect small businesses and consumers in America. The USTR public hearing is scheduled to be held on August 5th.

What It Means for the Shipping and Logistics Industry

If the proposed tariffs on EU output go into effect, it will increase the cost of aircraft parts and manufacturing as well as agricultural goods imported from European producers. When prices for imported goods increase due to tariffs, Americans buy fewer imported products, and the shipping and logistics industry consequently ships fewer imports. When the demand for shipping and freight decreases, so do profit margins for freight forwarders. The shipping and logistics industry will have to form new relationships, identify alternative producers and allies, and optimize more cost-effective routes to stay ahead against reduced trade resulting from the tariffs.

Global Shipping’s Import and Export Consulting

International trade is complex, especially in the wake of proposed tariffs and the subsequent changes to imports and exports. Global Shipping understands the hassle and confusion surrounding shipping goods from one country to another. Our expert import and export consulting services ensure that you have a solution to every question for a seamless import/export process. Our consultants are experienced in every aspect of the business—not only do we specialize in advising importers and exporters, but we also provide customs brokerage and documentation services. Contact us today to complete your international shipping processes with help from experienced consultants.

The Expansion of the Port of Savannah and its Effect on the Cargo Industry

cargo container ship approaching Port of Savannah, Georgia

In recent American shipping industry news, St. Louis has been chosen for a new rail connection with the Port of Savannah, a major U.S. seaport. The Port of Savannah is investing $3 billion into a joint partnership with the St. Louis Regional Freightway to improve the movement of goods to the Midwest.

With the expansion of the Savannah harbor, containerized cargo capacity is predicted to increase from 5 million to 8 million TEUs (20-foot equivalent units) by 2028, while the cost of intermodal freight transportation will drastically decrease, reducing the cost of container shipments by $300 to $400 when shipped from Savannah instead of the West Coast.

This progress is also due to the construction of a new rail terminal in Savannah’s shipping harbor, the Mason Mega Rail Terminal, which is projected to double terminal rail life capacity to 1 million containers per year. The Georgia Port Authority is contributing $92 million to help fund the new rail terminal.

With new infrastructure in place, the harbor will allow retailers and manufacturers to easily distribute goods between the Midwest and the country’s perimeter, all while cutting costs.

Prime Real Estate for the Shipping Industry

Matt Freix, Regional Vice President for DNJ International Services, claims St. Louis has everything shipping and freight forwarding companies need for easy, cost-effective transportation. The city is positioned in the middle of the country near four interstate highways and remains the country’s third largest rail hub. By partnering with the Port of Savannah, St. Louis can also support a larger volume of containers and goods.

The Effect on the Cargo Industry

The Port of Savannah’s expansion plan and partnership with St. Louis will support both existing and new business in the St. Louis region, and the development of new infrastructure will enable rail providers to offer faster rail services to the Midwest, a hub for intermodal freight transportation. More freight forwarders and shippers may decide to transport goods through the East Coast port instead of Western ones to cut costs and improve their business’ bottom line.

Improved freight and shipping capabilities create the potential for stronger relationships between national and global supply chains. The Port of Savannah is increasing its imports and exports and will continue to do so with the new developments set in place by the Georgia Port Authority and St. Louis Regional Freightway.