Wednesday, April 8, 2020
Use of Scrubbers Increasing under IMO 2020
To Save on Vessel Fuel Costs
Use of Scrubbers Increasing under IMO 2020
  • By Jung Min-hee
  • February 10, 2020, 09:28
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Shippers who chose to use scrubbers to adapt to IMO 2020 reduces fuel costs to a larger extent than those who use other methods. 

The International Maritime Organization has implemented IMO 2020 since last month so that the maximum ship fuel sulfur content is limited to 0.5 percent instead of 3.5 percent. Shippers are responding to it by using low sulfur fuel oil (LSFO), refining high sulfur fuel oil (HSFO) with a scrubber, or employing an LNG-propelled vessel.

With the price of LSFO soaring this year, shippers using the second method are currently succeeding in reducing fuel costs to a large extent and those that adopted the first method are choosing to use scrubbers in a hurry. LNG-propelled vessels, in the meantime, are emerging as the most effective long-term measure against the environmental regulations.

As of Jan. 31, bunker C oil as HSFO was US$266 cheaper than LSFO per ton. The price gap amounted to US$440 on Jan. 6 and the price of the latter has been over 150 percent of the price of the former since the beginning of this year.

According to industry sources, the difference of 150 percent means that the scrubber-based refinement is more cost-effective. As of Jan. 24, scrubber-equipped very large crude carriers’ and cape size bulk carriers’ average daily fuel cost reductions exceeded those of their LSFO-based counterparts by US$15,600 and US$8,040, respectively. The average charterage-converted profit was US$76,760 for scrubber-equipped vessels and US$61,183 for scrubber-less vessels. In addition, the figures were US$9,400 versus US$1,360 in the case of bulk carriers. In short, scrubber-equipped vessels using HSFO were much more effective in terms of fuel cost than those using LSFO.

Hyundai Merchant Marine decided two years ago to apply scrubbers to 80 percent of its ships. Maersk, which adopted LSFO earlier, changed its strategy in the second half of 2019. MSC, the second-largest shipping company in the world, changed its strategy, too.

LNG-propelled ships’ long-term outlook is bright as mentioned above and this is because an increasing number of countries are prohibiting the entry of scrubber-equipped ships. For instance, the Port of Karachi in Pakistan and the Port of Bahrain recently banned the use of open-loop scrubbers as in the case of 16 countries such as the United States, China, India, Belgium, Germany and Norway. According to the Korea Trade-Investment Promotion Agency, LNG-propelled ships are expected to account for 60.3 percent of new shipbuilding orders in 2025.