Macroeconomic Insights

A Sea Change for the Global Shipping Industry

The global shipping industry has a sulfur problem that the International Maritime Organization (IMO) is looking to solve. Although the world’s shipping fleet accounts for just 7% of the oil used by the transportation sector, it generates 90% of its sulfur emissions. Sulfur exposure contributes to respiratory and cardiovascular diseases in humans. As a result, the IMO will begin enforcing a cap on marine fuel sulfur emissions starting in 2020. According to Goldman Sachs Research, the new rules are likely to lead to higher fuel costs, while creating knock-on consequences for the refining, chemicals, mining and industrials sectors. “Full compliance could be a game changer for the refining industry,” says Goldman Sachs Research’s Nikhil Bhandari, who estimates the total impact to consumer wallets could be around $240 billion—which may largely transfer to the pockets of refiners.