VDR: 81 Pct of German Shipping Companies to Use LSFO

The vast majority of ships in the German fleet will run on the new low sulphur fuel oil (LSFO) from January 1, a new survey found.

This is one of the findings of the survey conducted by the German Shipowners’ Association (VDR) among its member companies.

As explained, although the data obtained through the survey does not represent the German shipping industry as a whole, it includes shipping companies from every sector of the country’s shipping industry.

The survey was conducted against the backdrop of one of the biggest changes occurring in the shipping sector – the International Maritime Organization (IMO) 2020 sulphur cap. There are essentially three options available to shipping companies during the changeover.

According to the survey, 81 percent of the companies surveyed will be using LSFO with a sulphur content of 0.5 percent in the future.

On the other hand, 11 percent will continue to use heavy fuel oil (HFO). This is permitted under the IMO rules, provided that scrubbers are installed on vessels.

Additionally, 6 percent of respondents indicated that they will be using other fuels, such as those prescribed already since 2015 for Emission Control Areas in the North Sea and the Baltic Sea – fuels with an even lower sulphur content of 0.1 percent.

What is more, 2 percent of ships in the German fleet will be powered by LNG after 2020, according to the survey.

“Germany’s maritime industry has carefully prepared for this enormous change. It ushers in a new era in maritime shipping, signalling the end of heavy fuel oil. We support this change and are implementing it – and in doing so, we are making an impressive contribution to long-term environmental protection,” Ralf Nagel, CEO of the VDR, commented.

Specifically, the greatest challenge looming as part of the changeover according to the companies surveyed will be technical problems encountered during operations in the future, as well as the cost of the new fuel, and the issue of cost compensation by third parties, in particular customers. German shipping companies are also concerned about the question of availability.

“There are many who fear that the new fuels could cause technical problems during operation – problems that could also have financial consequences,” Nagel added.

“We, therefore, call on all stakeholders to be as committed and flexible as possible in preparing for the changeover, to ensure that it will become a success story.”

According to the survey, the one-off investment expenditure for companies in the lead-up to the changeover averaged EUR 7.5 million (USD 8.3 million) per shipping company.

“Considering that more than two thirds of the shipping companies in Germany are medium-sized and operate fewer than ten ships, we realise just how great the financial effort was that the individual companies had to make in preparing for the changeover,” he explained.

Moreover, the additional annual costs now facing companies would make IMO2020 probably the most elaborate regulatory measure ever implemented by the shipping industry.

“Companies are particularly concerned about the fact that they will have to bear considerable additional costs in their ongoing operations in the future, and that possible compensation for these added costs by third parties, in particular customers, may not work as envisaged.”

“Of enormous importance for us is the fact that this is a worldwide regulation … This demonstrates that the IMO is a body that is capable of taking effective action to regulate shipping worldwide. The IMO should therefore play the key role when it comes to climate protection as well. In contrast, separate regional solutions, for example in the EU, should be avoided. Their effect would be to distort competition, and ultimately they would not have a sustainable impact on the climate,” VDR CEO further said.

With regard to the new sulphur regulation, the VDR called for effective controls by the respective port states.

“We will be relying on worldwide controls to monitor the implementation of the new regulation, so that no one can gain a prohibited competitive advantage. At the same time, however, we are confident that the flag states and also the customers of the shipping companies have a great interest in ensuring that the new rules are actually complied with,” Nagel concluded.