The Future of Bunker Fuel: More Expensive, More Complicated, More Problems, More Options

Thursday April 12, 2018

With the global 0.50% sulfur cap on marine fuel coming into force from January 1, 2020, the future of bunker fuel is one that is destined to be more expensive, more complicated, and gives the industry more problems, says Michael T. McNamara, Managing Director, Americas, VPS.

"With most owner/operators expected to switch to more expensive distillate fuels, estimates from the OECD are the 2020 requirements could add annual total costs up to USD 30 billion for the container shipping industry," said McNamara.

"But one has to ask, what is the cost to the planet if environmental issues aren't tackled?"

But there will also be a dizzying increase in the choice of available marine fuels, which even today is greater than ever.

"These will include an increase in non-traditional bunkers too, such as LNG, methanol, and ethanol bunkers," he notes.

Some owners are choosing to install exhaust gas cleaning systems, more commonly known as scrubbers, so they can continue to burn the same residual fuel bunkers they do today. But even then there will be cost and complexity considerations.

"For a Supplier the cost of maintaining the infrastructure to deliver HSFO is difficult to predict and depends upon demand and geography. For the Owner, strong economic incentives don't begin for most vessels until 2020, but the lead time to install can be very long," says McNamara.

In terms of what solution - or solutions - owners should choose, the key factors will be availability and price, and supply and demand, he says.

"Every fuel type has its pro's and con's, but the time to decide is here and there is no easy choice," says McNamara.

"What ever they choose, there will be an increased need for owners to work with a Fuel Management Partner to effectively measure and monitor fuel quality, to improve operational efficiency, protect their assets, comply with legislation, and ultimately save money!"

McNamara will be further exploring IMO2020 fuel choice implications at the upcoming IBIA Caribbean Bunker Conference being held in Jamaica April 17-19.

For more information on this event please click here: https://shipandbunker.com/events/icbc