Concerns for the new global clean air rules causing transport disruption. It has brought forward the shipment of armchairs and sofas from China by two months.
This issue is taken seriously by the U.S. furniture company RC Willey Home Furnishings.
On January 1, tougher regulations came into effect as the United Nations shipping agency and the International Maritime Organization set them up. There will be a knock-on effect for trucks and other transporters that move goods around the world as costs of shipping will increase by the end of the year.
In decades, it has been the biggest shakeup for the shipping companies. It also added to the danger of a rising trade war between the United States and China. Lastly, it has given pressure of an economic slowdown.
To not further slowdown the economic growth, consumers are not expected to pay more for goods, higher transport bills, and disruption to company deliveries.
Cutting of Sulphur emissions to 0.5% from 3.5% is a must for ship owners. It can only be done if owners will use low-Sulphur fuel or by using alternatives of such clean fuels like liquefied natural gas or traveling more slowly.
The delivery of about 450 containers was moved from September and October to July and August. It is with the reason of avoiding any disruption in the peak fourth quarter as ships prepare for the changes, including refitting equipment. It was the president of Berkshire Hathaway’s RC Willey Home Furnishings, Jeff Child who decided to move the shipping.
He stated in a news report, “We just don’t want to get caught in a situation where it affects our inventory.”
Ship upgrades or more expensive fuel will be charged to customers as twenty-five logistics company executives told news reports they would pass along IMO-related costs.
One global head transport company stated, “The Sulphur cap will further put pressure on ocean freight rates and we… will have to pass those costs on to remain competitive.”
Transport Company are Anxious
A spokesperson from Nestle said that to reflect the impacts of the new rules, “fuel adjustment methodology” should happen to some transport companies.
Also, an economist with the World Bank’s Development Prospects Group stated, “Higher fuel prices would result in higher transport costs,”
Adding, “This would have the potential to lead to slower economic growth and trade.”
The hit to companies could be a drag on the world economy as economists see the demand for manufacturers to absorb their part of the cost and are not likely to raise the price of consumer goods.
An energy and environmental counsel for the American Trucking Associations said, “There’s a storm approaching but we don’t know how bad the storm is going to be.”
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