stakeholders of the shipping industry have been grappling with this new strict
regulation that demands the industry to change and change fast with just two
years to go.
to be the biggest disruptions in the shipping industry in living memory,
SeaNews rightly argues.
ruling will certainly lead to such a massive drop in the demand of High Sulphur
Fuel Oil (HSFO) that ‘No entity along the value chain — from refineries,
trading, logistics, ports to shipowners, will be untouched.’
options, low sulphur fuel oil (LSFO) and Liquified Natural Gas (LNG) appear to have emerged as
the preferred options; of course, scrubbers or exhaust gas cleaning systems too
have claimed attention of the industry. But, the investment in fixing scrubbers
seems to be rather a negative point; it is said investment ranges between $1-9
million per ship depending on its size; it may cost an arm and a leg. Shipowners
are not that comfortable with finance that such investment could be done
without hesitation or consideration. As SeaNews points out, the industry is in
‘a low margin environment’. Between compliance and penalty, there is
possibility some operators might choose the latter.
absence of a ‘global game plan, there is a consensus that conformity for
post-2020 bunkering will help trim overall costs and improve energy supply and
to IMO 2020 carries a steep price tag in a cash-strapped energy industry.
Consultants Wood Mackenzie estimated last year that a full compliance scenario
would incur an increase of up to $60 billion per year in global bunker fuel
costs from 2020, while S&P Global Platts said the impact of these changes
will reach $1 trillion over five years. The line between winners and losers in
the early 2020s could be well-defined between those who can afford to evolve —
and those who cannot.
In a post
2020 scenario, indeed, refiners get a terrific opportunity to make money.
2020 regulations have, no doubt, created an atmosphere of chanciness within the
shipping industry, SeaNews concludes. Identifying problems and constraints
would enable companies to put the necessary projects in place well before the
2020 implementation date.
take-home message is the IMO 2020 regulation will be an opportunity for some
shippers, but for others it will be a significant challenge. In either case,
there are a number of approaches one should consider to improve position and
ensure overall competitiveness in the period between 2020 and 2024 when a new
equilibrium is found. The more effective approaches are technology-enabled, but
all come back to a focus on enabling the workforce to adapt to new operational
realities posed by IMO 2020.