Looming BWM Convention is Raising the "Life or Death" Stakes for Beleaguered Ship Owners

Anna Ziou, Policy Advisor at the UK Chamber of Shipping says the industry will face hard decisions once the Convention comes into force.

Credit managers and vessel owners alike likely need no reminders over the mounting pressures currently effecting the industry, but owners are now facing yet another threat to their liquidity from the impending Ballast Water Management (BWM) Convention.

As Ship & Bunker previously reported, earlier this month Belgium became the latest nation to ratify the Ballast Water Management (BWM) Convention, and with aggregate tonnage now at 34.82 percent - and 35 percent needed - the convention is tantalisingly close to coming into force.

"Once the Convention is in force the industry will face hard decisions. As the industry is facing one of its worst market situations, the decision on which system to fit can be critical for survival," says Anna Ziou, Policy Advisor at the UK Chamber of Shipping.

The remaining 0.18 percent of tonnage "will not be difficult to meet within the next one or two months," according to Ziou, and once it is, it will introduce the industry "to a tsunami of compliance costs and uncertainties."

One of the issues is the basic cost of the BWM systems, which have been estimated at $1‐3 million.

Shipbroker Charles R. Weber Company, Inc. (CR Weaver) pointed out last year that this cost might make little sense to some owners based on the remaining life of their vessels, and with dry bulk massively oversupplied and now said to be experiencing vessel values at 30-year lows, an increasing number of vessels may fall into this category.

In response, an increasing number of shipowners are reported to be undertaking the required special surveys or dry docking in order to delay their BWM system installation date as much as possible once the Convention is in force.

"But concerns have been raised that this will likely result in a bottleneck in 2020 as dockyard and classification society capacity may not be enough," says Ziou.

2020 could also conceivably be the date a 0.5 percent global sulfur cap for bunkers comes into play, meaning owners could also be eyeing dry dock space at this time for scrubber installations, so they can remain compliant while burning cheaper bunkers.

US Uncertainty

Ziou says uncertainty also surrounds the "US's unhelpful position on the dead/live criteria."

"It is believed that the US position will define the future of the effective implementation of the Convention. The lack of USCG type approval systems is a major obstacle to decision making for the industry and even a potential game-changer," she explains.

"Yet, despite the life or death stakes, the US so far does not seem to have stepped back and accept UV systems. Almost half of the available IMO approved systems use UV technology."

With the stakes said to be high for short sea shipping also, Ziou says that sector will be keen on a "pragmatic solution" at the next IMO meeting based on the "same risk area" concept, which Danish Maritime Authority has defined as "the delimitation of a body of water that allows one risk assessment to be applied to all ports and locations within that area."

This "seems to be easier to administer for all parties," says Ziou.

"There is no doubt that the IMO meeting in April is crucial. No one disputes that the Convention is needed, but for the chaotic Convention to work, sensible and bold decisions are needed.

"The IMO shall not disregard the concerns raised, but shall provide effective means to assist in building confidence. The requirements need to be proportionate, current and not panic the industry. But allow it to navigate safely through this tumultuous Convention to meet its objectives."