In light of the approaching IMO 2020 sulphur cap, Bloomberg suggests that in the following years about 2,200 vessels are to install scrubbers, as if they don’t they will be banned. DNV GL states that putting all those vessels in a line, they’d stretch about 340 miles.
Concerning scrubber installation, Mr. Christopher Fee, General Manager – Environment and Sustainability, Oldendorff Carriers, presented experience feedback from the use of scrubbers so far. Given that vessels will be able to keep using today’s cheaper fuel by installing scrubbers, many carriers will be put out of service for a long time for refits.
Burak Cetinok, head of research at Arrow Shipbroking Group in London commented
This will knock out quite a lot of ships off the market and by reducing their supply, it will also boost shipping rates, especially in the fourth quarter. We expect a lot of disruptions to vessel supply.
Yet, although scrubber installations will benefit the shipping companies, the logistics may be a challenge, according to Bloomberg. From 3,000 vessels expected to have the equipment installed by the end of the year, two companies account for almost a third of those volumes: Wartsila and Alfa Laval AB.
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Jonathan Chappell, an analyst focusing on marine transportation equities at Ecercore ISI noted that although it’s too early to see an impact on the freight market now, because most of the work is yet to be done, rates are nonetheless likely to rise when the installations ramp up and vessels go off-hire,
Roger Holm, head of marine solutions at Wartsila stated
The ramp-up is quite huge. Operationally we are really pushing the boundaries. From a delivery point of view, it’s quite heavy focusing on the second half of the year.
The vessels carrying iron ore, coal and grain had a tough year, as their earning were rotating because the market suffered some supply disruptions late in 2018 and early 2019.
