Scrubber retrofit to meet IMO sulphur rule will cut 380 box ships
SOME 380 containerships with a combined capacity of 4
SOME 380 containerships with a combined capacity of 4.4 million TEU will be retrofitted with scrubbers in order to comply with the International Maritime Organisation's (IMO) new rule that will cap sulphur content in marine fuel to 0.5 per cent, effective from January 2020, according to Alphaliner executive consultant Tan Hua Joo.
This means that shippers could face a further deterioration in schedule reliability in the coming months as shipping lines remove vessels from service to retrofit them with scrubbers.
Most of the global box ship fleet will burn low sulphur fuel oil (LSFO) to meet the new regulation that will add an estimated US$10 billion to $15 billion to carrier's annual fuel bill, reported IHS Media.
There is currently a price differential of between $170 and $320 per ton between high-sulphur bunkers and marine gasoil. However, Precious Shipping managing director Khalid Hashim pointed out that the 'high-sulphur' fuel supplied in South America had a sulphur content of between 0.2 and 0.7 per cent and was just $40 more expensive than bunkers at other major refuelling centres such as Rotterdam.
Singapore-based CTI Consultancy partner Andy Lane said that withdrawing vessels to have scrubbers fitted could 'screw schedule reliability up a bit further and make supply chain integrity a little harder to forecast'.
On-time performance by carriers on the Asia-US trades hit record lows in January and March, with the all-water east coast lane clocking up its sixth consecutive month of record lows in schedule reliability, according to SeaIntelligence Consulting data.
The maritime consultancy said 2018 was the worst year for container line schedule reliability with eight out of 12 months registering the lowest level of schedule reliability since the firm began collecting the data in 2012.
Vessels earmarked for retrofitting are among 550 box ships, totalling six million TEU, that are due to be equipped with scrubbers, according to figures compiled by Mr Tan. The remaining containerships are either new buildings that are being delivered with scrubbers already installed or the 50 ships that have already been dry-docked for the equipment to be fitted.
Mr Tan said 30 containerships per month, equal to about 300,000 TEU, will be taken out of service for 30-40 days to have the emissions control equipment installed. The number of affected vessels is equivalent to 1.3 per cent of overall supply.
'The problem,' he said, is that 'carriers are extremely tight-lipped about their plans,' in terms of which strings and trades will be affected and for how long as vessels are withdrawn for dry-docking.
Mr Tan highlighted that scrubber uptake has soared in recent months. Mediterranean Shipping Company (MSC) will have the biggest fleet of scrubber-equipped vessels, with 180 containerships to be fitted with exhaust gas cleaning systems. Evergreen Marine will have 80 vessels and Maersk Line 50. Other carriers that will partially equip their fleets with scrubbers include Ocean Network Express (ONE) and CMA CGM.
'Over 10 per cent of the containership fleet, or 20 per cent of total capacity will have scrubbers installed by the end of 2020.'
Mr Tan also accused carriers of 'having a complete lack of transparency in calculating the bunker adjustment factor [BAF],' the formula carriers will use to calculate extra shipping charges stemming from the higher price of LSFO. He said the revamped BAF 'is not a reasonable way to do the calculation, given that carriers will fit scrubbers' and the new BAF assumes 100 per cent LSFO usage.
Carriers contend that the proposed BAFs are the simplest and most transparent way to calculate the higher costs of meeting the mandate and that calculations that would factor in scrubber usage, vessel size and other factors affecting fuel consumption would overly complicated fuel formulas.