IMO 2020: Shipowners Need Protecting Against Fines, Delays from Off-Spec & Incompatible Fuels, Says BIMCO

Grant Hunter, Head of Contracts & Clauses, BIMCO

Shipowners need protecting from the consequences of charterers using non-compliant or incompatible fuel from 2020, says BIMCO.

When the new 0.5% sulfur cap on marine fuel comes into force from January 1, 2020 the industry is expecting to see a raft of new bunker blends on the market, with the potential for little to no compatibility between them.

The issue of enforcement will also be much more prevalent in 2020 than it is today, with many of the new fuels expected to be blended very close to the 0.50%S limit meaning both willful and accidental noncompliance can be expected.

While the same issues, in theory, exist today, in practice there is little worry over the current global sulfur cap of 3.5% being flouted (the global average sulfur content of HSFO being burned is around 2.7%) and while it is possible that two perfectly on-spec fuels can be mixed to produce unusable bunkers, in practice it is rare to present as an issue.

"From 2020, it will be the shipowners' responsibility to make sure the ship is complaint with the new low-sulphur fuel regulations - so the shipowner will be the one who is fined if the ship is caught without the right fuel onboard," says BIMCO.

"This makes the owner very dependent on the time charterer to provide the right type of fuel, and if the charter party is vague - or does not deal with the issue - there will be disputes."

BIMCO says the industry needs a clause stating that, if the charterer does not deliver the right type of fuel, he will protect the owner from any consequences or fines if he gets caught by port state control.

That clause also needs to deal with complications from the as-yet-unknown consequences of there being multiple, incompatible 0.50%S blends.

"If there is a delay or a problem with the engine because the fuel has been mixed - even if that fuel is compliant - who will pick up the cost for that delay? These types of questions are becoming urgent as we go through the transitional period," says Grant Hunter, Head of Contracts & Clauses at BIMCO. Image Credit: BIMCO.

As Ship & Bunker previously reported, BIMCO will begin work on developing such a clause later this month.