Bulk operator reveals mixed strategy for 2020 compliance

Malcolm Latarche
Malcolm Latarche
ShipInsight

06 August 2019


Hong Kong-based bulk operator, Pacific Basin continues to assess and plan for three major environmental regulations high on the industry agenda the company has said in its first half 2019 report.

To comply with the Ballast Water Management Convention, 30 of the company’s ships are now fitted with ballast water treatment systems and it has arranged to retrofit its remaining owned Handysize and Supramax vessels by the end of 2022.

Pacific basin

On 2020 fuel compliance, Pacific Basin has chosen a two-pronged strategy saying it expects the majority of the global dry bulk fleet, especially smaller vessels such as its own Handysize ships, will comply by using more expensive low-sulphur fuel. We are preparing thoroughly for this, including cleaning fuel tanks, securing availability of good quality compliant fuel and training crews to ensure compliance and seamless service delivery to customers.

Some owners of larger vessels with higher fuel consumption, including some Supramaxes, are planning to comply by continuing to burn cheaper heavy fuel oil in combination with installing exhaust gas cleaning systems or “scrubbers”. Pacific Basin has chosen a balanced approach, with scrubbers successfully fitted and operational on ten of its Supramaxes so far and has arrangements in place with repair yards and scrubber makers to install scrubbers on a majority of its owned Supramax vessels.

The combination of compliance options means that including chartered-in ships, the company expects 85%-90% of its combined Handysize and Supramax fleet will comply by burning low-sulphur fuel. The future fuel price differential is uncertain but having 10%-15% of its overall fleet scrubber fitted provides some optionality in how it manages its fuel needs to comply with the new rules.

The company also said it is carefully following the developments of IMO’s ambitious longer-term strategy to cut CO2 and total greenhouse gas emissions from shipping. The report says “We believe that these environmental regulations will discourage new ship ordering until new, lower-emissions ship designs become available. This will improve the supply-demand balance and benefit larger, stronger companies with high quality fleets that are better positioned to adapt and cope both practically and financially with compliance and new technology”.