Members of the Association of International Shipping Lines (AISL) are gearing up for enforcement of an international regulation cutting sulphur content on marine fuel even as the association foresees higher cost from the policy’s implementation.
“Member lines are under obligation to comply with the IMO (International Maritime Organization) regulation lowering the global sulfur cap from the present 3.5% limit to 0.5% effective January 1, 2020,” AISL general manager Atty. Maximino Cruz told PortCalls in an email.
The regulation applies to all ships, whether on international voyages between two or more countries, or on domestic voyages solely within the waters of a party to Annex VI International Convention for the Prevention of Pollution from Ships or MARPOL Convention.
The Philippines ratified MARPOL Annex VI in 2018.
The sulfur cap policy, also known as IMO 2020, aims to reduce the amount of sulfur oxides emanating from ships to protect the environment and health of populations living close to ports and coasts.
As shipping lines adapt to the new requirement, Cruz said “there will be costs entailed which will lead to increase in freight rates.”
The compliant low sulfur fuel is costlier than the current bunker oil used by shipping lines.
According to research and consulting firm Wood Mackenzie, the IMO sulfur regulations will have the potential to be “highly disruptive to the pricing and availability of compliant fuels” as the marine sector, which consumed 3.8 million barrels per day of fuel oil in 2017, is responsible for half of global fuel oil demand.
Cruz, however, noted that cost increase will depend on options available to shipping lines, including use of an exhaust gas cleaning system or “scrubbers”; the switch to marine gas oil (MGO) or to the ultra-low sulfur fuel oil; or the burning of liquefied natural gas (LNG) as fuel.
“Each option, however, has its own constraints and limitations,” Cruz pointed out.
“The cost increase will gradually be felt as shipping lines make the necessary preparations as the deadline approaches,” he added.
IMO is hosting a symposium on IMO 2020 and Alternative Fuels on October 1-18 to raise awareness and to take stock of the preparations for the IMO 2020 rule, and discuss the role of alternative fuels in decarbonizing international shipping.
Minimal disruption
Asked if customers should expect disruption to operations as shipping lines move toward compliance, Cruz said “there could be some minimal service disruptions while scrubbers are being installed, not to mention the scrubbers’ limited manufacturing capacity, drydock space, among others.”
He added, “It is important to note that while the use of scrubbers appears to be the preferred option to date, there are other alternatives that shipping lines may resort to.”
AISL president Patrick Ronas, in a separate interview with PortCalls, foresaw no major disruption, noting the lower volume of cargoes during the first quarter of the year.
Ronas said shippers may also expect some communications from various shipping lines on the implementation of IMO 2020.
The Philippine Maritime Industry Authority is finalizing the roadmap for the country’s implementation of IMO 2020. – Roumina Pablo
