Posts

container port

Bunker market not ready for IMO 2020

The bunker market is far from ready for the substantial switch in demand to low-sulphur fuel, when the IMO’s 0.5% cap comes into force on 1 January next year, according to the Marine Bunker Exchange (MABUX). 

In an article published by international shipping association BIMCO, the bunker exchange cautions that “shipowners are readybut the bunker market is not” –adding that reports from oil majors regarding the delivery of LSFO (low-sulphur fuel oil) “are concerning”. 

MABUX estimates that the global shipping fleet consumes some 5.3m barrels a day, with about 4m of these being non-compliant after the new IMO regulations kick in. 

Given that the majority of demand is expected to shift to LSFO to comply with IMO 2020, it calculates that the market for some 3m barrels will effectively “disappear overnight”. 

Moreover, the premium for LSFO remains unclear, meaning ship operators cannot properly budget for the increase in their fuel costs, or for that matter advise clients how much extra they expect them to pay. 

“The 0.5% fuel is not physically in the market right now… we have only futures with delivery time in December 2019,” said Sergey Ivanov, director at MABUX.

We do not have all the answers as to when, where and how much, making it difficult to forecast what the exact margin will be between high-sulphur fuel oil (HFO) and LSFO,” he said. 

“Right now, we see that marine gas oil trades at a premium of about $250 per ton more than HFO, but the forward curve forecast is that it may rise to about $380 per ton at the beginning of 2020,” said Mr Ivanov. 

MABUX understands, from its discussions with the main global bunker suppliers, that the first regular deliveries of the maximum 0.5% compliant fuel to bunker ports around the world is expected some time in the third quarter. 

Operators with ships that do not have scrubbers installed, which enable vessels fitted with the exhaust gas cleaning systems to continue to burn HFO, will need to start cleaning their tanks and replenishing with LSFO several weeks before the IMO 2020 regulations come into force. 

And in discussions with the oil bunker suppliers, a confusing outlook has emerged. 

One oil major surveyed by MABUX said it would be delivering LSFO to 18 ports in the world, including main hubs, and would continue to deliver HFO to 15 ports. Another said it would only be delivering LSFO to seven ports, for now. 

“This picture suggests the question of availability of very low-sulphur fuel is critical at this point. No one is sure that there will be enough LSFO in all the main ports in the world,” said Mr Ivanov. 

“In our view, shipowners are ready. Many are in a position now where they can say ‘give me compliant fuel and I will adjust my power system, I will train my crew and start using it’.

“But they need the compliant fuel and they cannot get that now. They do not currently have much choice. Many of them are ready, but the bunker market is not,” he warned.

Source: The Loadstar

lng gas

Carriers turning to scrubbers to comply with IMO 2020

Around 16% of the ocean carrier global fleet – equating to 36% in terms of teu capacity – will be equipped with exhaust gas cleaning scrubber systems to comply with the IMO 2020 0.5% sulphur cap.

Ships with approved scrubber systems installed will be allowed to continue to burn heavy fuel oil (HFO) after 1 January next year, but other vessels will need to bunker with low-sulphur fuel oil (LSFO), which is expected to carry a premium of around $200 per tonne.

And with ultra-large container vessels (ULCVs) consuming upwards of 100 tonnes a day at sea, the cost savings for a voyage with scrubber-fitted ship are likely to be substantial.

The consultant estimates that, according to a survey, more than 840 containerships are set to be equipped with scrubbers, for a total capacity of 8.09m teu, which includes 590 planned retrofits.

It said: “With the cost of scrubbers falling rapidly, to just $3-$5m a unit compared with $5-$8m a year ago, the scrubber option has become more attractive for owners.”

It noted that several carriers, including Maersk Line and Hapag-Lloyd, which had initially expressed doubts over the use of scrubbers, had “changed their minds”.

However, carriers that expressed scepticism or simply sat on the fence seem to have lost the cost-saving initiative to rivals that were in the scrubber camp from the moment the IMO approved the low-sulphur regulations in late 2016.

Famously, MSC’s chief executive called its strategy to install scrubbers on many of the ships in its fleet as a “no brainer”, whereas Maersk and Hapag-Lloyd’s executives argued that the use of exhaust gas cleaning systems was “not the long-term answer”.

Of the 12 top-ranked carriers, Alphaliner said, MSC had the “most extensive scrubber programme”, with more than 200 ships expected to have systems installed. Second is Taiwanese carrier Evergreen, with a retrofit and newbuild scrubber programme for around 140 vessels.

CMA CGM has “already committed” to 80 scrubber units, said the consultant, a number that is expected to climb to over 100 units by 2021.

Elsewhere, ambitious South Korean carrier HMM plans to have over half of its fleet of more than 50 ships equipped with scrubbers, and has made its strategy for IMO 2020 compliance a key part of its planned recovery from heavy loss-making.

Meanwhile, Maersk has said that it would install scrubbers on around 10% of its ships, and has allocated $263m for its owned fleet. It will supplement this with an unspecified number of chartered vessels fitted with scrubbers.

Carriers will need to begin bunkering ships not fitted with scrubber systems with LSFO in the final quarter of the year, in order to be compliant with the new IMO regulations.

Source: Alphaliner / The Loadstar

global

UK shipping sector wants assurance on four areas of concern over IMO 2020

The International Maritime Organisation has been urged to clarify four areas of IMO 2020, as carriers scramble for compliance with the forthcoming low-sulphur fuel limit.

The “once-in-a-generation disruptor to shipping’s commercial environment” takes effect on 1 January 2020: a fuel sulphur content limit of 0.5%, down from 3.5% in some parts of the world, at some considerable cost to the industry.

Amid concern and the countdown, the UK Chamber of Shipping has called for the IMO to address four key areas: mitigation of safety issues linked to the switch; education on handling the fuel; reporting of compliance issues; and how the organisation will provide consistent global regulation.

The chamber said: “The new regulation will change the face of the shipping industry. It will have a positive impact on the environment and air quality, but could have a disruptive effect on operations if shipowners do not prepare effectively.”

While the IMO has yet to address issues surrounding fuel safety, it is working on guidelines to support the consistent implementation and to help state control enforce the regulation.

Furthermore, the UN body is reportedly also working on a fuel oil non-availability template (FONAR).

The UK Chamber says FONAR provides documentation to prove every effort to obtain compliant fuel had been pursued prior to a decision to bunker with non-compliant fuel.

But, it said, certain questions remained unanswered: “For instance, what happens to non-compliant fuel remaining onboard after a ship, having already provided a FONAR, arrives at a port where compliant fuel is available?”

Part of the problem facing the industry is uncertainty over how to comply with IMO 2020, with some suggesting scrubbers as the best option to mitigate the impact of the cap, some have pointed to LNG as an alternative, while others claim the clearest route to compliance is low-sulphur fuel.

A report by Panalpina suggests there has been an uptake among container lines looking to take the LNG route, with some hubs “racing” to develop LNG bunkering technology. It cites an order from CMA CGM for ten 15,000+ teu vessels, five to be fuelled by LNG and five fitted with scrubbers.

For forwarders like Panalpina, the focus will be on making sure it can maintain the best rates and provide customers with options they are happy to pay for, it said.

Global head of ocean freight Joerg Twachtmann added: “We have been developing a transparent and competitive pricing mechanism to cut the best deal for our customers.

“We now have a globally competitive bunker mechanism that will increase visibility for customers and ease the transition towards new fuel types to comply with the sulphur limit.”

For more information please go here: http://www.imo.org/en/MediaCentre/HotTopics/GHG/Documents/2020%20sulphur%20limit%20FAQ%202019.pdf

Source: The Loadstar