Zeamarine Friday became one of the first, if not the first, major multipurpose vessel/heavy-lift (MPV/HL) carriers to announce a bunker adjustment policy directly related to the International Maritime Organization (IMO) 2020 switch to low-sulfur fuel.
In a statement, the Hamburg-based carrier said tramp bookings will be subject to a new IMO 2020 bunker adjustment clause for voyage quotations as of Sept. 1. For liner services, which operate in defined, predictable service patterns, Zeamarine will levy a low-sulfur surcharge of $35 per freight ton for all bookings beginning on or after Sept. 1, regardless of volume or loading/discharge region.
Zeamarine CCO Dominik Stehle told JOC.com the tramp bunker adjustment clause will be based on the difference between IFO 380 (traditional 3.5 percent sulfur “heavy” fuel oil) and marine gasoil (MGO), pricey low-sulfur fuel now used in emission control areas globally.
“For each $10 difference between IFO 380 and MGO, we will charge an additional fee per freight ton,” Stehle said. This method for figuring costs will continue until early 2020, when the global fleet completes the IMO-required switch away from high-sulfur fuel oil (HSFO) to new blends of 0.5-percent sulfur fuels, also called very low-sulfur fuel oils (VLSFO). The IMO mandate goes into effect Jan. 1, 2020.
Zeamarine has begun preparing its fleet for the switchover, Stehle said, which requires taking ships off hire for several days, cleaning tanks, and running them on several cycles of new fuel. “There are a lot of expenses associated with this new regulation, and these are being incurred in the fourth quarter of 2019, so that is why we are charging the new bunker rates as of September 1,” he said. “There are significant costs related to the preparation of our vessels.”
Although the fleet has seen challenges with low-sulfur fuel compatibility and ship engines, Stehle believes the oil companies will have hashed out their problems by Jan 1. “No producers can afford not to be ready” for IMO 2020 requirements, he said. In the interim, he expects the fleet to rely on expensive but reliable MGO once they’ve switched their ships over from burning HSFO.
Supply side questions
Some analysts are not so sanguine about the supply of low-sulfur bunker fuel post-January 1, however. According to energy analysts at IHS Markit, the parent company of JOC.com, come 2020, refiners will be able to meet only half of the global low-sulfur marine fuel demand with new VLSFO bunkers. The remaining demand for compliant low-sulfur fuel will be satisfied with MGO — especially given that VLSFO is a new product that, at least initially, will be sold in different variations in different ports, raising engine compatibility concerns and availability questions.
IHS Markit sees “diesel [i.e. MGO] prices rising sharply and HSFO prices plummeting,” due to what will be a sharp pullback in demand, said Daniel Evans, vice president and Paris-based head of refining and marketing.