Not only were the sky high prices for compliant fuels that had been forecast fail to materialise, the accelerating shutdown of economies in Europe and elsewhere coupled with an oil price war between Russia and OPEC caused the price of crude oil to stray into negative territory as stockpiles built up all around the globe.
Tankers were snapped up to store crude and bunker prices dropped to levels not seen for many months. The tumbling price differentials between HFO and VLSFO meant that those who had jumped on the scrubber bandwagon saw the payback period stretching from a matter of months to maybe three years or even more.
Much to their relief, several of the owners that had opted to install scrubbers saw the contracted dates come and go as yards struggled to meet their commitments due to labour and material shortages. Hundreds of contracts were either postponed indefinitely or cancelled altogether. The leading suppliers of scrubbers such as Wartsila and Alfa Laval among others felt the effect in their pockets as profits and share prices plunged in unison.
Scrubber sales may also have been hit by a steady trickle of bans on open loop scrubber operation in some ports and territorial waters. However, for most ships fitted with scrubbers the impact of such bans would probably have been minimal accounting for only a small fraction of the fuel used in a voyage of thousands of miles.
Things began looking up for shipping generally over the summer as some economic activity resumed but the surge in new cases of COVID-19 throughout October and the reimposition of lockdowns and travel bans soon dashed hopes of any sustained improvement. Anticipating restrictions would continue for months, the organisers of the SMM exhibition in Hamburg – postponed from September until February 2021 – finally decided to abandon any attempt at running a physical exhibition until 2022.
This week the newly gathering storm clouds seem to have disappeared to be almost replaced by blue skies following the announcement of a potential vaccine for COVID-19 developed by Pfizer and BioNTech that looks to have achieved a 90% success rate in trials. In addition, there are another 11 promising vaccines that are also nearing the end of development.
Assuming all the stops are pulled out in producing the vaccine and that the early results are maintained as the vaccine is rolled out, the pandemic could be in retreat during next year.
Already the price of crude is reflecting the optimism rising 7% already this week if that rate of rise continues and as economic activity once again gets underway it could well be that scrubber sales having been in hibernation for almost a year may soon begin to awaken.
We need to be cautious that the success of the vaccine has not been over exaggerated and that no other surprise is lurking around the corner but there does seem to be some light at the end of the tunnel.
Of course for scrubber makers there are still environmental objections to overcome but fighting political battles is something the shipping industry, its suppliers and customers are quite used to and can be easier to fight than unknown biological enemies.
Then there is just the matter of decarbonisation to deal with – but that is another story.