CMA CGM – 2023 annual results
PRESS RELEASE 2023 annual financial results: Financial results reflect a year of contrasts for the transport ...
The IMO’s regulation for a maximum 0.5% sulphur content in marine fuel coming into force on 1 January looks set to divide ocean carriers into two distinct low and high scrubber groups.
According to Drewry, there will be a group of ‘low-scrubber users’ with an average of just 1% of their ships equipped with the exhaust gas cleaning systems, operating only a handful of vessels, 2% of teu capacity, able continue to burn cheaper 3.5% sulphur content heavy fuel oil (HFO).
This first group will include low-sulphur fuel oil (LSFO) advocates and “anti-scrubber” carriers Maersk and Hapag-Lloyd, ONE, Cosco, Yang Ming and PIL.
The second group, which Drewry defines as ‘high-scrubber users’, will have an average of 7% of their vessels with scrubber technology installed in time IMO 2020, representing an average 10% of their slot capacity.
This group, led by MSC, arguably the most pro-scrubber line, is expected to have around 250 of its 560-vessel fleet equipped with scrubbers by 1 January, with Evergreen potentially with 140 of its 208-strong fleet with a scrubber installed.
In the same group is CMA CGM, which is also due to receive nine 23,000 teu LNG-fuelled ULCVs next year and South Korean state-subsidised HMM, which has an order for nine 23,000 teu ships fitted with scrubbers and is also chartering tonnage with scrubbers.
Industry consultant Alphaliner estimates that some 840 containerships, equating to around 8.1m teu and representing 36% of the global container fleet by capacity, will have scrubbers fitted – albeit several will not be ready for IMO 2020, due to delays and backlogs in the installation process at dry docks.
The carriers that are investing around $5m per ship for scrubber technology have gambled on the continuation of a significant price spread between HFO and LSFO to recover the cost and operational disruption of the installation process as well as to be more competitive than their ‘low-scrubber’ rivals.
Ocean carriers that do not have scrubbers fitted on ships will need to start replenishing the tanks of these vessels in the final quarter of the year in order to be compliant with IMO 2020 and it is probably only when this demand spike hits the market that the true premium for LSFO will become clearer.
At present there is a wide range of prices and Drewry noted that for July and August compliant LSFO was showing only a 30% mark-up on HFO at Asian ports.
Indeed, data compiled by Ship & Bunker in August indicated what it termed “rollercoaster prices” for the compliant fuel, with a high for Singapore-sourced LSFO at $213 per tonne on 15 August, down to a low of $85 at the end of the month.
Meanwhile, carriers will begin to roll out their low-sulphur surcharges in the final months of the year in a bid to compensate for the extra cost of LSFO. It remains to be seen what surcharges carriers will impose on their customers for containers carried on scrubber-fitted vessels, or what carriers that have not installed scrubbers but happen to partner with a ‘high-scrubber user’ in an alliance will deem to look to recover.