What is IMO 2020? Should Trucking Companies Care?
by Hannah Marcom | November 13, 2019
IMO 2020 Could Affect Fuel Costs
There are certain aspects of being a trucking company owner that make you feel like it’s the same as taking care of a baby, like the price of fuel – it requires constant supervision. At TCS Fuel it’s our business to help trucking companies find fuel at the best price. That’s exactly why we also vigilantly monitor fuel costs. As we head toward the new year, we see something big that will impact diesel fuel prices for all trucking companies.
What is IMO 2020?
We’re talking about the International Maritime Organization (IMO). There is a mandate from the IMO outlawing the use of high-sulfur bunker fuel that is currently being used to power cargo and cruise ships and that will require those ships to switch to low-sulfur diesel. This mandate will go into effect on January 1, 2020. The required change to low-sulfur fuel for cargo and cruise ships will help improve air quality and protect the environment.
Will IMO 2020 Affect Trucking Companies?
It might not immediately seem like IMO 2020 will impact trucking, because we’re talking about cargo ships, right? But cargo ships will have to increase their use of diesel fuel or new blends of fuel oil. This will create a higher demand for diesel fuel, which will inevitably impact the supply. The U.S. Energy Information Agency said in a March report that the mandate could increase the price of diesel up to 20 cents a gallon, but other experts are expecting a higher spike.
“While there is a lot of uncertainty around the impact of IMO 2020, two things are clear – demand for ultra-low sulfur diesel (ULSD) will increase and higher diesel prices will affect small carriers more than large carriers, who can take advantage of hedging and fuel surcharges to minimize the impact,” says Chris Courts, President and Managing Director of TCS Fuel. Chris has over 25 years of experience in the fuel card industry and is our resident expert when it comes to all things fuel.
The key point to takeaway is that even though we don’t know how much fuel prices are going to increase in the new year, the law of supply and demand proves that the price of diesel fuel will go up. Fuel is one of the largest operational costs for trucking companies and any small price increase can make or break a trucking company’s cash flow.
How to Decrease the Impact of Rising Fuel Costs for Your Trucking Company
Fuel prices might go up, but that doesn’t mean you can’t take action to lessen the effect on your trucking company’s finances. A fuel card is a great way to lower your fuel costs. TCS Fuel Card clients save an average of 35 cents per gallon on fuel and the savings add up even more with $0 transaction fees when they fuel up at one of our in-network locations nationwide. Our clients end up saving thousands of dollars on fuel every year and those savings are what help them prepare for the different economic seasons of trucking.
Don’t wait until January 1, 2020 when IMO 2020 goes into effect. Get a head start on saving for fuel today! Give us a call at 844-827-7705 or get started here.