Drewry: Owners Concerned about Meeting New Bunker Standards

Shipowners showed concerns over compliance and a general resignation in having to switch to more expensive low sulphur fuel to meet the IMO’s proposed 2020 bunker regulation, according to Drewry’s survey.

Decisions over whether to install scrubbers, switch to LNG-propelled ships, or simply bear the extra cost of using more expensive, compliant fuel will be preoccupying all shipowners in light of the International Maritime Organization’s (IMO) proposed new bunker rules that will place a 0.5% sulphur cap on fuel in 2020.

A survey by Drewry of shipowners of all types of cargo ships found that most respondents, 66% of them, believed the regulation would become enforceable as planned in 2020.

However, over one quarter thought that the regulation would need to be extended due to a lack of readiness, with concerns ranging from the availability of low sulphur fuel, scrubber installation capacity, LNG infrastructure and potential further changes to legislation.

In terms of ensuring compliance, owners indicated that using low-sulphur fuel is the intended solution for the existing fleet in 66% of cases, far ahead of other solutions such as heavy fuel oil with exhaust SOx scrubbers with 13% or LNG with 8%, with owners wary of the cost implications for retrofitting.

That gap narrows significantly when looking at compliance for newbuilding projects. Low sulphur fuel oil is once again the preferred option with 37%, but there is far more appetite for LNG with 24% and scrubber-installed ships with 21%.

Respondents expressed a high degree of concern that external factors will make it difficult to achieve compliance by the 2020 deadline with the availability of low-sulphur fuel the major worry, while a limited capacity to retrofit scrubbers was also cited.

The IMO is expected to produce a set of guidelines to owners later this year that will clarify the tolerance levels for non-compliance, which will hopefully allay some owners’ fear of being punished in cases when they justifiably fail to meet the new standards.

“Meeting the new bunker standards is a very real concern to many owners and the sooner the IMO can provide clarity on its enforcement the better. Owners must brace themselves for additional opex and capex costs associated to the legislation,” Drewry said.