HMM CEO: Financial Burden from Upcoming Regulations Imminent
The forthcoming environmental regulations are likely to affect the global container shipping industry in an unprecedented manner, C. K. Yoo, President and CEO of Hyundai Merchant Marine (HMM) said in a keynote address at TMP Asia 2017.
Referring to the Ballast Water Management Convention and Low Sulfur regulations taking effect from 2020, Yoo voiced his concern about operational and commercial challenges arising from uncertainties related to the ways of compliance to these regulations in the course of making due preparations.
The low sulfur compliance seems to be the most serious one in magnitude, according to Yoo.
There are too many options on the table when it comes to compliance, Yoo continued, fuelling the complexity of the issue.
Speaking of the three options available, low sulfur fuel oil with less than 0.5% sulfur emission, scrubbers and LNG-fuelled ships various downsides have been stressed.
“In recent years, as the low sulfur regulations in the Emission Controlled Area (ECA) have been
tightened, shipping lines have become familiar with low sulfur fuel. So we are now well aware how
burdensome financially it will be to expand the use of Low Sulfur Fuel Oil from the limited ECA areas
to all over the world at all times.
“As of today, the prices of LSFO or LSGO are more than 50% higher than that of HFO.
“Furthermore, it is very difficult to forecast the price of low sulfur fuel oil in 2020, not to mention its
suppliability region wise,” he said.
With regard to scrubbers, Yoo referred to several drawbacks, including installation costs along with the lengthy installations process and reduction of cargo space on ships.
LNG-powered ships, despite gaining in popularity over the recent years, are an expensive option as well. As explained, this option is further hindered by the limited availability of LNG bunkering hubs and uncertainty related to the pricing of LNG.
“Whatever option shipping lines may choose, it is inevitable that the sizable cost and investment are
likely to incur for the compliance of the requirements.
“A recent report claims that new regulations will cost annually about USD 60 billion and some predict even more, when the IMO’s 0.5 % sulfur cap for bunker fuels kicks in,” Yoo pointed out.
In conclusion, he highlighted that in order to address these uncertainties solutions should be sought in technological developments in order to reduce the cost burden related to compliance.
As there is little time left for preparation, efforts should be doubled, he added.
With regard to HMM’s effort in that respect, Yoo said that the sulfur compliance is taken as an opportunity of enhancing the company’s competitiveness by replacing the old fleet with environmentally friendly ships in line with the new regulations.