Current and upcoming regulations, indicate that the industry is on the right path. However, new funds are necessary, as going green will cost, the consultancy firm highlighted. 2019 will be crucial and the sector will have a better picture of whether the necessary drydocking capacity exists.
2020 sulphur cap
Industry response to the 2020 global sulphur cap is still developing and reveals approaches which are diverse. There are challenges around the financing of retrofitted scrubbers on an asset finance basis. These are not insuperable but there does not currently appear to be a ‘one size fits all’ financing solution which is quick and easy.
Wood Mackenzie predicts the possible risks and uncertainties for 2019 focusing on oil demand, tight oil upside, and Iran’s export volumes as well as IMO’s 2020 sulphur cap regulations, noting that the entire refining value chain needs to be updated in the next year for the 2020 regulation on marine fuels.
CMA CGM informed that it will remove the Emergency Bunker Surcharge as from January 1st, 2019. The company has been implementing the measure since June 2018, due to increasing oil prices. The Brent average price in November led the company to this decision.
As per a previous announcement in late September, Geneva-based Mediterranean Shipping Company is introducing new bunker charges as of 1 January 2019 in line with 2020 sulphur cap. After considerable analysis of operating costs and related market factors, the company has now established a new price mechanism – the BRC (Bunker Recovery Charge) – which will be transparent to respective trades.
Due to increasing oil prices, CMA CGM announced that it will adjust the amount of the Emergency Bunker Recovery measure to recover this increase. The new measure will be valid from December 1st, 2018, until further notice. Emergency bunker recovery surcharge has a direct connection to volatility of oil price.
As the 2020 sulphur cap is nearing, oil markets are preparing to adapt to the new situation. Currently, the majority of refiners are planning to increase their production of middle distillates for about a decade, responding to projections of rising diesel demand.
CMA CGM announced that as from October 1st, 2018, the 0.50% sulphur limit will be applicable to the ports of Shanghai and Ningbo in the People’s Republic of China. For this reason the company will implement low sulphur surcharge to these areas, to ensure the sustainability its services.
European Shippers’ Council (ESC) announced it disapproves the mechanism of surcharges that shipping liners launch to cover the higher rate of lower sulphur fuel, calling for a dialogue with container liners, like Maersk, MSC and CMA CGM, to find the best mechanism to share the costs.
Ahead of the 2020 sulphur cap, Hapag Lloyd said that using low-sulphur fuel oil will be the key solution for the company to remain compliant. This fuel however, comes with an increase in fuel costs, something that made Hapag Lloyd establish a Marine Fuel Recovery (MFR) mechanism.
AMSA fines company for unlawfully operating domestic commercial vessel07/08/2020
US cruise operators voluntarily suspend voyages until at least October 3107/08/2020
Pilot loses life after falling from pilot ladder07/08/2020
Philippines launch new procedures on crew changes, repatriation07/08/2020
- Maritime Health
Update: Live map depicts spread of coronavirus07/08/2020
Beirut port closed06/08/2020
Container casualty causes in the spotlight06/08/2020
Australia risks clogged ports with over-contract seafarers stopping two ships06/08/2020
Benin to allow foreign Armed Security Teams on board ships06/08/2020
Maritime Autonomous Surface Ships initiative launched06/08/2020