SHIPOWNERS and operators have a tough set of choices ahead of them to adapt to new marine fuel regulations and many complex commercial and practical issues will influence their decision making in coming months, Bernhard Schulte Shipmanagement Singapore’s managing director Bob Maxwell said.

Considerations include the geographies within which the ships operate, where the ships are trading or bunkering, the age of the vessels, the operating profile of the ships, and the owner’s finances. External factors to consider will range from oil prices and market conditions to technological advancements.

The International Maritime Organization’s decision to implement a global 0.5% sulphur cap on marine fuel from 2020 has brought certainty with respect to deadlines for implementation.
But owners are now tasked with adopting the right strategy, as the cost implications can be tremendous in the current market environment.

Mr Maxwell said that there was no single answer for owners and what worked for one ship might not work for another.

“It’s a case of looking at each ship, or certainly each small group of ships, and assessing what’s right for them. Some owners will sell, some will scrap and some will be in a position where they can invest and make the most of it.”

The simplest option for shipowners is to just burn low-sulphur fuels, depending on what is available from refiners in a given location, and hope that the right fuels are available and the fuel cost is not prohibitive.

This is likely to be the case for the vast majority of the existing fleet because of the costs and impracticalities of installing scrubbers or exhaust gas cleaning systems, and a low earnings outlook. The financial condition of owners will make a big difference.

“There will be some ships that will go for scrubber technology. I do not see a big uptake on scrubbers in the retrofits, but for newbuilds it may be quite interesting because they can be fully integrated into the ship’s systems,” Mr Maxwell said.

He said that not only were the retrofits quite expensive, but also they were quite difficult to fit onto vessels and a lot of ships were seriously challenged in the amount of space that was available, which would tend to put people off.

The issue of retrofits had been exacerbated by other regulations such as the Ballast Water Management Convention, and for many vessels there was not enough space to accommodate new equipment. There were also constraints in generating enough power for all the new equipment.

“Retrofitting is a lot more than just deciding it is going to go on board,” Mr Maxwell said.

He said more equipment meant more maintenance, and while some traditional maintenance costs were going down due to better equipment, overall costs would increase.

For newbuildings, however, owners and yards had a wider range of options, from the installation of scrubbers to new technologies such as liquefied natural gas-powered engines.

“There is definitely a different answer in newbuilds than there is for existing ships,” said Mr Maxwell. “Advanced technology is much easier to fit and much more cost effective on a newbuild than on a retrofit. I think for rebuilds there will be an uptake on alternative fuels. We see a lot of interest in that in Asia.”

Some vessels in regions such as Europe where coastal emission rules were in place, already had scrubbers installed and most short haul and long haul vessels had the capability to burn low-sulphur fuels. Owners would be looking to time retrofits with drydocking where possible.

“The industry is good at handling changes when we know that the change is required,” Mr Maxwell said. “It was blatantly obvious it was going to happen. Anybody who thought it was going to be 2025 was living in a dream world.”