Box ship owners rush to fit vessels with scrubbers to meet IMO 2020
GIVEN that high sulphur fuels are half the price of low sulphur options, container shipping lines have been scrambling to get their vessels into shipyards to be fitted with scrubbers in time for the January implementation of the International Maritime Organization's (IMO) new sulphur cap
GIVEN that high sulphur fuels are half the price of low sulphur options, container shipping lines have been scrambling to get their vessels into shipyards to be fitted with scrubbers in time for the January implementation of the International Maritime Organization's (IMO) new sulphur cap.
According to Alphaliner, 10 per cent of box ship capacity will be fitted with scrubbers by January, with more to follow over the coming two years. The differential between high sulphur fuel (HFO) and low sulphur fuel (LSFO) prices is the main driver of scrubber demand, American Shipper reported.
'The very high take-up rate for scrubbers reflects the attractive economics for these ships with the current price spread for low-sulphur fuel oil over HFO already reaching US$250 per tonne, which would provide the operators of these ships with substantial savings compared to conventional units that would need to switch to LSFO,' Alphaliner was cited as saying in a note.
However, the strategy of carriers is widely divergent, with some including Mediterranean Shipping Company (MSC) and Maersk betting big on scrubbers, while others including Ocean Network Express (ONE) are hoping that low sulphur prices will eventually subside.
The number of containerships fitted with sulphur scrubbers reached 212 units on December 10, according to Alphaliner, with an additional 101 units currently at repair yards undergoing retrofits.
'Taken together, the scrubber-fitted ships will account for some 5.9 per cent of the total number of container ships - or 11.8 per cent of the total TEU capacity of the global fleet - by early 2020 when the new IMO 2020 sulphur cap comes into effect,' said Alphaliner.
'More scrubber-fitted containerships are expected to be delivered in the next two years, including both newbuildings and retrofitted units that could possibly bring their total number to some 1,000 ships for 10 million TEU by the end of 2022.'
However, the long line of container ships waiting to enter repair yards and their extended stays while there being fitted with scrubbers is costing carriers dearly in terms of vessel downtime, noted Alphaliner.
Average yard stays for vessels undergoing retrofits is now 59 days, with 17 per cent of vessels now out of action for 80 days. For larger ships, the cost of the downtime could be as much as US$30,000 to $50,000 per day, although as FreightWaves has reported, the reduction in capacity is helping support spot freight rates.