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Live from Sea Asia 2019

IMO 2020 - Majority of smaller bunkering ports won't have compliant fuel

Despite assurances from fuel suppliers over the availability of compliant fuel to meet IMO 2020 from 1 January next year, industry executives warn that logistics will be a mess and the majority of smaller bunkering ports will not have low sulphur fuel.

Speaking at a Sea Asia media roundtable in Singapore yesterday Marius Johansen, vice president, commercial (ships agency) for Wilhelmsen Ship Services (WSS), warned: “Of course running a liner type business you will frequent ports which you can’t necessarily rely on the fuel to be available when you need it to.”

The global ship agency handled calls at 2,000 ports globally last year, and bunkering calls in 115 of those ports. “I think we can say the vast majority of these ports will not have compliant fuel, eventually they will, but I think it’s going to be a bit of a mess from a logistics point of view when (IMO) 2020 kicks in.”

He noted though that the top 10 bunkering ports handled 75% of all bunker calls and that larger re-fuelling ports such as Singapore and Algeciras would have sufficient supplies of compliant fuel.

Seperately, on the shipowning side, Wallenius Wilhelmsen has a split strategy of using both scrubbers and compliant fuel. It has been operating scrubbers on some vessels for a number of years, and 23 vessels in its fleet of 130 will have exhaust gas cleaning systems fitted by end of 2021.

Learn more about complying with IMO 2020 at "A practical guide to upcoming regulations" at the Sea Asia 2019 Conference

John Hahn ceo of Ocean Freight Exchange, a start-up offers a web-based scheduler bunker delivery optimisation solution, described the coming into force of IMO 2020 as not being a once in a generation event but “once in 100 years”.

“A lot of people in the shipping industry don’t think the product is going to be where they need it so all of this uncertainty. Our belief is the product is going to be there, just at a certain price.”

Hedge funds have been betting on the spread between the price of low sulphur fuel oil and high sulphur fuel oil, which can still be used with scrubbers after 2020, widening, but in fact the spread has collapsed. “So certain hedge funds have gone out of business betting on the wrong side of this IMO 2020 fuel spread,” Hahn stated.

As with Johansen he believes the physical supply logistics around IMO 2020 will be a mess. He warned on the issue of tank cleaning with bunker tankers removed from the market. So certain bunker tanker owners have decided in phases to clean certain tanks. The fact is if you mix 99% clean with 1% dirty you’re still over the cap,” he warned.

Johansen meanwhile sees a major business opportunity for WSS in tank cleaning, not just for bunker tankers but also the bunker tanks on trading vessels, which will have to start months before the sulphur cap comes into force.

Read more: Sulphur 2020 tank cleaning challenge could cost billions

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