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Container Shipping & Trade

Container Shipping & Trade

Low sulphur fuel to cost box ship industry US$34Bn

Thu 29 Mar 2018 by Rebecca Moore

Low sulphur fuel to cost box ship industry US$34Bn

Only 3% of world box fleet expected to have scrubbers by low-sulphur fuel deadline – despite extra cost to industry of US$34Bn a year for MGO

The cost of the container ship industry moving from HFO to low sulphur fuel is expected to be huge – yet despite this, the take-up of scrubbers has been forecast to be tiny.

A blog by S&P Global Platts said that if the global container fleet, which burns around 100M tonnes of fuel annually, was to switch from 3.5% IFO 380 fuel to compliant marine gasoil the extra bunker costs would be US$34Bn a year, based on the current price of gasoil futures in 2020.

This is a large issue for container shipowners given the 2020 low sulphur fuel deadline. But according to a whitepaper published by Swedish financial services group SEB, less than 2,000 ships out of the global box fleet of 60,000 are expected to have a scrubber system installed by 1 January 2020.This equates to a tiny 3.3% of the global fleet.

It could be that this forecast will need to be boosted. Scrubber manufacturers have told CST they expect scrubber orders to pick up within the container ship market due to the 2020 low sulphur directive.

CR Ocean Engineering (CROE) president and chief operating officer Nicholas Confuorto told Container Shipping & Trade that 2016 “was very quiet in terms of scrubber orders. But once the IMO decision was made, people started to take action.”

But he warned that operators need to act now if they want to a scrubber installed in time for January 2020.

It seems that container shipowners would be wise to look at scrubbers or alternative fuels such as LNG if they don’t want to be hit with huge fuel costs.

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