- With IMO deadline just months away, shipping lines are scrambling to fit scrubbers, but some are finding they have left it too late and it takes six weeks for the retrofit.
- 4.4 million twenty-foot equivalent units in container ship capacity is taken out of service this year and is contributing to the worst on-time carriers performance.
- 550 box ships are due to be equipped with scrubbers at a rate of about 30 vessels a month, consequently squeezing capacity.
- Majority of vessels will opt to burn LSFO, for which the premium is between U.S. $170 and $320 per metric ton over 3.5% sulfur fuel.
- It costs between U.S. $5 million and $10 million for a scrubber system depending on the vessel and where it is fitted, plus greater maintenance and installation time.
- Rates expected to rise this year and next, either as a result of reduced capacity or lines paying higher bunker premiums (or both).
The International Maritime Organization’s (IMO) Jan. 1, 2020 deadline for shipping companies to use low-sulfur (0.5% max) fuel has been on and off in the news for months, but without much interest from those outside the industry or the environmental organizations that lobbied for its introduction, says an article published in MetalMiner.
Deadline just months away!
With the deadline just months away, the implications are becoming more apparent.
Shipping lines are scrambling to fit scrubbers, but some are finding they have left it too late. It currently takes some six weeks to retrofit a scrubber.
Outcome of the surge in demand
With the surge in demand for scrubber equipment and a shortage of qualified engineers, yards are full of work over the next 12 months.
Some 4.4 million twenty-foot equivalent units (TEU) in container ship capacity is taken out of service this year, according to JOC. That amounts to about 380 container ships and is already contributing to the worst on-time performance by carriers on the Asia-U.S. trades since 2012, the article reports.
In total some 550 box ships, totaling 6 million TEU, are due to be equipped with scrubbers — at a rate of about 30 vessels a month, consequently squeezing capacity.
Not all are opting for scrubbers
Not all vessels are going for scrubbers, despite the current cost advantage. The majority of vessels will opt to burn low-sulfur fuel oil, for which the premium is between U.S. $170 and $320 per metric ton over 3.5% sulfur fuel.
It costs between U.S. $5 million and $10 million for a scrubber system depending on the vessel and where it is fitted, plus greater maintenance and the downtime required for installation. But the price difference between low-sulfur fuel oil and heavy fuel oil can add U.S. $1 million to an Asia-Europe round trip for a ULVC.
Hoping to get slot or fuel premium fall
Those opting not to fit scrubbers but pay the fuel premium are either biding their time by waiting for an installation slot or hoping the fuel premiums will fall.
The change will likely also hasten the scrapping of older vessels deemed uneconomic to retrofit or operate at the higher fuel costs.
As a result, shippers can expect rates to rise this year and next — either as a result of reduced capacity or lines paying higher bunker premiums (or both).
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Source: Agmetalminer
