As we approach one of the most impactful marine environmental regulations in history, leaders of the shipping community have addressed the International Maritime Organization (IMO) with a proposal for a more gradual introduction of the 2020 0.5% sulphur emissions limit. Although this is an unprecedented event, we can draw parallels with methods used by the California Air Resource Board (CARB) to enforce ECA regulations. In this note, we discuss the historical context of the IMO’s progression on environmental issues, the current outlook for the 0.5% regulation and parallels between shipowners’ position and methods used by the CARB, which may act as a template for smoother implementation.
Our review of the VLCC fundamental outlook for our Mid-Year Update publication showed that the crude and residual fuel oil transportation market will remain structurally over-supplied in 2019 with commensurate weakness in VLCC (and other DPP segments) freight and earnings before re-balancing thereafter. In this note, we highlight the reasoning for our 2019 view in the context of historical observations.