Bit of context on what they call IMO 2020 regulation.
TLDR: this is regulation that moves us towards a cleaner and more environmentally friendly industry, but it's a small step in a larger effort to make shipping environmentally friendly.
Couple of questions to answer:
1. What is IMO 2020, and what is the intent of the law?
2. How can shipping lines comply? And how is it enforced?
3. How disruptive is this for the industry?
4. Does this help us as a society?
1. IMO 2020 is regulation to reduce the amount of sulphur in the exhaust gasses of all vessels. It's a landmark achievement by an international organization (International Maritime Office) to ensure the world has signed up for this.
2. Shipping lines (and this includes all vessels) can comply in multiple ways (in order of use): 1. Use low sulphur diesel which is much more expensive than what they use now, 2. Install scrubbers (or what this article calls cheat devices) to scrub the sulphur out. There are 2 type of scrubbers: open and closed. The open one is called "cheating device" as it scrubs sulphur from the bunker, but dumps it via an open connector with sea water in sea. The closed one collects the sulphur so it can be safely disposed. It is questionable whether the open devices are net positive on the world, and different studies show different results. 3) use LNG. Most ports have indicated that they will only allow vessels that comply. Some countries, mostly developing nations, have already indicated that compliance is not needed, but all major ports on the East-West trades will comply and therefore it will impact most of cargo flows.
3. This will be very disruptive. There is now all of a sudden too much high sulphur bunker, and too little diesel. Price spread will increase rapidly when we approach January 1st 2020. Cargo will become more expensive. That said, refiners will benefit as well power generation in countries where they don't care about sulphur. Refiners will make more money on low sulphur diesel as diesel prices will go up (more demand), power generators in mostly developing nations will buy the sulphuric bunker to lower their fuel costs.
4. Yes, it does help. It’s a small step towards 2050, which is target for IMO to decarbonize the industry. This is an industry with long and large asset cycles, and change therefore is slow.
So: is the device cheating? No it’s perfectly allowed. Only a smaller share of all vessels will use, and most others will shift to low sulphur diesel. So it should be net positive for the world. This is how we look at it at Flexport.