Japanese carrier ONE is backing lower cost low-sulphur fuel, and not exhaust scrubbers, as the long term answer to meeting the 2020 sulphur cap.
Speaking at TOC Asia last week Jeremy Nixon, chief executive of Ocean Network Express (ONE) said he believes the container shipping industry will be able to live with the cost of low sulphur fuel to meet the requirements of the International Maritime Organisation’s (IMO) cap of 0.5% on the sulphur content of bunker fuels from 2020 once the available supply increases.
Nixon noted that there is very little low-sulphur fuel available today in the market, and the price is increasing. The premium of around $200 per tonne compared to conventional bunkers has jumped this year and there are some predictions of a $500 per tonne premium heading into 2020, which would be a major headache for the industry.
However, the “real cost” of producing the low-sulphur fuel, Nixon said, is $75 per tonne more than conventional bunkers, and ONE is expecting that supply will increase and put pressure on the current price. Ultimately the extra cost will be passed on to shippers, and “carriers will be pushing for cost recovery” Nixon added.
When it comes to scrubbers, Nixon described ONE’s limited investment in these systems as “hedging”. ONE will have scrubbers on vessels in 2020, on both owned and leased tonnage, but the total number will be “no more than 10,” Nixon said.
“We are not great fans of scrubbers,” he continued, adding that they are complex and ONE believes it is better to take the sulphur out of the fuel than try and remove it from the exhaust in a complex treatment process. Furthermore, open loop scrubbers are banned in some areas, including Singapore where ONE operates four berths at Pasir Panjang in a joint venture with PSA.