Trucking Businesses are Unprepared for Potential Fuel Supply and Pricing Disruption Due to Impending Marine Legislation

We can predict that demand for transport diesel is expected to surge

Many trucking businesses in the United States are neither aware of nor prepared for the potential fuel supply and pricing disruption that is anticipated when new marine legislation is introduced at the start of next year, according to new research by World Kinect Energy Services.

In a survey of its own customers, the Miami headquartered company, which provides energy, logistics and technology solutions to businesses all over the world, found that 8 out of 10 were unaware of the impending IMO 2020 Marine Diesel legislation, or the potential risks it presents to their business.

In response, World Kinect Energy Services (a brand of World Fuel Services, Inc.)has launched a campaign to help onshore trucking businesses in North America to understand the implications of the legislation which, while marine focused, could have potentially significant impacts on a wide variety of major business sectors, including trucking.

Effective from January 1, 2020, the International Maritime Organization (IMO) has mandated a substantial reduction in the allowable percentage of sulphur in marine fuel, from 3.5 per cent to 0.5 per cent. The move is aimed at reducing the negative impact of shipping on human health by decreasing air pollution from sulphur emissions by 68% globally.

Exactly how the marine industry will respond to these regulations remains uncertain, but global demand for low sulphur fuels, such as diesel, is expected to rise by as much as three million barrels per day and affect the volatility of fuel pricing, according to the IMO.

Outside of the marine industry, it is anticipated that the legislation could have a significant impact on a range of major business sectors, including manufacturing, construction, agriculture, mining and transportation.

However, awareness of the legislation and the potential risks it presents to businesses is low, with World Kinect Energy Services’ customer survey, conducted by the company to better understand industry needs, revealing:

• Eight out of ten customers (81%) hadn’t heard of IMO 2020
• Over two thirds (68%) admitted their business isn’t prepared for any fuel supply or pricing disruptions IMO 2020 could cause
• Almost a quarter (24%) acknowledged their business requires specialist help to prepare for IMO 2020

“It’s widely agreed that the added draw on diesel supplies as a consequence of the forthcoming IMO 2020 legislation could affect trade flows worldwide, increase transportation and shipping costs, and create rapid changes in price levels and market volatility,” said Deborah Neal, director of price management at World Kinect Energy Services. “For many businesses, this could result in higher costs and longer wait times for the fuel needed to run their business effectively.

While marine organizations have known about this legislation for some time, our research reveals that, worryingly, such awareness does not extend to businesses in other major industry sectors, who are simply unaware of the potential risks to their business. These include disruption to fuel supply or an increase in fuel prices, as well as supply chain implications.

Our multi-platform campaign is aimed at helping these businesses to ensure they have a clear understanding of how IMO regulations can impact their operation, saving them costs and ensuring they’re fully prepared and in the best possible position come January 2020.”

“IMO 2020 will present radical changes in the industry, but no-one knows precisely what is going to happen until it fully comes into effect,” said Rick Joswick, Global Head of Oil Pricing and Trade Flow Analytics, S&P Global Platts. “We’ll have a clearer understanding at the start of 2020 of the scale of the impact and fuel price volatility, but what we can predict is that demand for transport diesel is expected to surge. Bulk wholesale prices for diesel could also increase as ship operators source supplies of cleaner marine fuels in order to comply and avoid potential penalties. People need to realize that the volatility of prices within the commodity markets will go far beyond the marine sector, it will resonate across land businesses and even consumers, and they need to be prepared.”

To help businesses understand the legislation and the risks it could present, World Kinect Energy Services has created a microsite, drawing on its experience and expertise, to provide help and advice on how businesses can mitigate risks and save costs.

The company is also running a series of business events and webinars over the coming weeks, led by its experts, who will help businesses to understand how they prepare for the impending legislation.

Category: Driver Stuff, Featured, Fuel & Oil, General Update, News