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  • DATVF.VWU
    1.521
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  • DATVF.LAXSEA
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  • DATVF.CHIATL
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  • DATVF.ATLPHL
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  • DATVF.PHLCHI
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  • DATVF.LAXDAL
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  • DATVF.VNU
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  • DATVF.VEU
    1.482
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  • ITVI.USA
    9,815.630
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  • OTRI.USA
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  • OTVI.USA
    9,813.900
    -2.100
    0%
  • TLT.USA
    2.450
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  • WAIT.USA
    150.000
    0.000
    0%
  • DATVF.SEALAX
    1.048
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  • DATVF.VSU
    1.176
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  • DATVF.VWU
    1.521
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  • DATVF.LAXSEA
    1.994
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  • DATVF.CHIATL
    1.889
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    1.579
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  • DATVF.PHLCHI
    0.976
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    1.483
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  • DATVF.VNU
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    0.869
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  • DATVF.VEU
    1.482
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  • ITVI.USA
    9,815.630
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  • OTRI.USA
    4.730
    0.030
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  • OTVI.USA
    9,813.900
    -2.100
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  • TLT.USA
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MaritimeNews

Maersk changes course, will install IMO 2020 scrubbers

(Photo: Maersk)

As late as last month, during APM-Maersk’s (AMBKY) Q2 earnings call, CEO Søren Skou insisted that the Danish shipping line did not take a favorable view of scrubbers as a means to comply with the IMO 2020 guidelines reducing the sulphur content of marine fuel from 3.5% to 0.5%.

“We don’t like the solution. I’ve spoken to that many, many times,” said Skou. “We think that the sulfur should be taken out of the fuel at the refinery where you have the big process plans to do so. And for us to build washing plans on 700 ships simply does not make any sense to me.”

Instead, Maersk planned on using low sulphur diesel, a fuel that costs approximately twice as much as marine bunker fuel, a heavy, high-viscosity oil. Oil traders thought that increased demand for diesel products from the maritime industry would boost prices and push refineries to produce more diesel, reversing diesel’s declining fortunes in an age of hybrid and battery-electric vehicles.

According to Alphaliner, Maersk is the largest container line in the world, with a fleet amounting to 4.01M TEUs and a global market share of 17.8%. The shift in fuels had the potential to crash the price of bunker fuel, or heavy marine oil (HMO), hurting ill-equipped refineries and boosting refineries capable of producing low-sulphur fuel products, but more fleets deploying scrubbers will mitigate that risk.

Skou himself hasn’t come out with any kind of color on why Maersk made the decision; instead it was announced by Niels-Henrik Lindegaard, head of Maersk Oil Trading, in an email to Reuters. Just last May, of course, Lindegaard said Maersk had rejected scrubbers. “In our opinion, scrubbers will not be the way forward for our fleet. Whilst the business case for investing in scrubbers may look appealing at first, it is not a long-term solution to place such complex machinery on our vessels,” Lindegaard told Ship & Bunker in 2017

Now Lindegaard is singing a different tune. 

“As part of the preparations we have decided to invest in new scrubber technology on a limited number of vessels in our fleet of around 750 container vessels,” Lindegaard wrote to Reuters. Still, he maintained that scrubber technology would only be a small part of a multi-pronged approach to Maersk’s IMO 2020 compliance. 

Maersk shifting its official position on scrubbers should be seen as part of an accelerating maritime industry adoption of the technology. Ship & Bunker reported that in May 2018, the total number of vessels that had either ordered or installed scrubbers totaled 817 vessels, a spike of nearly 300 vessels in just a few months. At the moment, scrubber manufacturers are struggling through a buyer’s market, but that’s expected to roll over into a seller’s market as the January 1, 2020 deadline approaches and steamship lines grow more comfortable with the technology.

The shipping industry’s crude oil demand amounts to about 5M barrels per day. For reference, the United States, now the world’s largest producer of crude oil, recently topped 11M barrels per day. Therefore the evolution in fuels demanded by maritime shipping will have a profound influence on energy prices and refinery capacity. If demand for low sulphur fuel oil (LSFO)—a viable option when combined with scrubbers—then maritime won’t be competing with diesel, and truckers, for refining capacity.

The complexity of scrubber technology, the high initial costs, and dedicated personnel required to maintain the scrubbers caused Maersk to shy away from them, at least initially. But there are plenty of studies circulating showing that especially for large vessels, scrubbers allowing steamship lines to avoid purchasing marine diesel would pay for themselves in less than a year. 

 


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John Paul Hampstead, Associate Editor

John Paul writes about current events and economics, especially politics, finance, and commodities, and holds a Ph.D. in English literature from the University of Michigan. In previous lives John Paul studied Shakespeare in London and Buddhism in India, but now he focuses on transportation and logistics in the heart of Freight Alley--Chattanooga. He spends his free time with his wife and daughter herding cats, collecting books, and walking alongside the Tennessee River.
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