Will the cap fit?

Malcolm Latarche
Malcolm Latarche

12 February 2016


There is an awful lot happening right now in shipping although some might say that with so many ships laid up the opposite must be true, but lack of employment is just one of the issues that must be giving operators headaches. Competing for attention is the possible coming into force of the ballast water convention next year, the ECDIS rollout if the ships are among those that will be affected and the agonising over whether to scrap ships and at what price. Bunker costs, now at levels well below the peak of just two years ago are a single bright point – unless of course the operator happens to be involved in the offshire sector. However, the subject of future bunker issues was raised at the International Bunker Industry Association (IBIA) annual dinner at the beginning of this week. IBIA’s main current concern beyond changes in its board was falling bunker sales but the organisation’s view of future issues could just add to the woes of operators. IBIA represents members’ interests at the IMO, sharing both practical considerations and industry perspectives on the introduction of the 0.50% global sulphur cap. IBIA believes that if it were to be introduced in 2020, there would not be sufficient compliant fuel to meet industry demand. Such a move would lead to extreme price differentials, low levels of compliance with those companies that were compliant, operating at a 25% cost disadvantage to those less scrupulous. The IMO is currently investigating the position and can hold of the introduction of the cap until as late as 2025 under current MARPOL rules but the industry will come under huge pressure from environmentalists if that were to happen. The 2020 date is not so far away now and operators will need to start thinking about their options now and mulling the cost impact if installing a scrubber features on the list. At today’s bunker prices that may seem a cost that can be avoided but if bunker costs start to rise again they may find that there answer to the cap doesn’t fit with changing conditions.