Ship Hire Rates Receive Scrubber Install Bounce

Thursday June 27, 2019

Ship hire rates are likely to benefit as the rate of vessels taken out-of-service to retrofit scrubbers increases, new research has shown.

Research outfit Clarksons has said that 0.9% of the very large crude carrier (VLCC) fleet and 0.3% of the capesize fleet were out-of-service in June for scrubber installations, according to a report by marine news provider Freight Waves.

If those ships had remained in play, Clarksons said that VLCC daily earnings would have averaged around $19,000 in June, an increase of $3,000 pushed up by the absent tankers.

Capesizes added $1,000 to daily earnings to hit $15,000 per day due to scrubber retrofits, the report said.

Looking ahead, scrubber installations are likely to accelerate for the rest of 2019 and continue into 2020.  Clarksons data has 60 scrubber installations for capesize ships as of June 25, with 186 in January 2020, and 253 by mid-2020.

Scrubbers allow ships to continue to use high sulfur fuel oil despite the new 0.5% sulfur cap on bunker fuel in place from the start of next year.

However, the equipment inccreases a ship's weight and takes up space. At the same time, there is some controversy over open or closed loop units. The former has wash water expelled into the open sea while the latter keeps it onboard for later disposal in port.