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For environmental protection, a global sulphur cap on ocean bunkers was enforced on 1st January 2020 by the International Maritime Organization (IMO). Through a one-year observation, this study investigates how the international shipping industry reacts to this new regulation. We specifically focus on the ocean carriers’ reactions to the new regulation before and after the regulation as well as these carrier’s clients’ attitude toward this new regulation. As 2020 is also a year with a serious global shock—Covid-19 pandemic, we also explore the demand and supply changes on ocean carriers and how that may lead to a different reaction toward this IMO 2020 regulation.
The main purpose of the sulphur cap is for a better environmental protection, to force carriers to use higher quality bunkers, and to lower pollution emissions. On the other hand, it also means additional costs for the shipping industry, thereby bringing concerns for both ocean carriers and their clients for these increasing costs. Through this one-year observation, we analyzed three strategies (installing a scrubber, using a liquid natural gas engine, and burning 0.5 % sulphur oil,) that carriers can take to be compliant with the regulation and the reasons why they decide which strategy they decide to take based on corporate structures (e.g., cost forecasting, operations inefficiency, infrastructure availability, short or long-term concerns over financial implications). Moreover, we also found customer behaviors changed these carriers both mentally and physically toward IMO 2020 due to the reversion of supply and demand in the market.
From these established findings, we make conclusion about the key factors and background of 2020 can lead to the successful implementation of IMO 2020 without serious obstacle as the market expected before 2020.
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