Adapting The Energy Supply Chain For IMO 2020

Demand will shift, and the ensuing prices connected to these fuels will ultimately feel the brunt of the changes. The IMO 2020 regulations will transform the oil and refined product industry, creating an interesting dynamic for transportation supply chains.

Refineries have several options to react to shifting demand, including:

1. Change their mix of crude oil inputs that later influence the type of refined product outputs
2. Change the configuration of the refining processes to enable the increased production of low-sulfur products.
3. Combine the above two options.
4. Make no changes and simply ramp-up production of existing products to maximize profitability and limit the extensive capital expenditure associated with changing the overarching refining operations.

Though IMO 2020 is currently center stage, shippers should know that post-implementation the shift to move freight with lower emissions intensity will not be over. Looking to future strategies that remain ahead of the regulatory landscape and manage fuel accurately and transparently will be of greatest benefit to supply chain participants.

Read how refined product inventories have already begun to shift moving into Q4 here.