The increasing spread in cost between low- and high-sulfur fuels is an impetus towards container lines doubling down on scrubber installations for the vessels in their respective fleets. Ten percent of the total container ship fleet is on track to have scrubbers installed by 2020, double the estimate at the beginning of this year.
The cost spread in fuel
prices is such that Maersk has accelerated plans of scrubber installation
purchases to third-most orders of any line to date. Of the top ten lines, only
Ocean Network Express (ONE) remains with no scrubber orders confirmed, citing
further studies of the feasibility of scrubbers on some of their larger ships.
In the meantime, ONE will continue to rely on low-sulfur fuel to meet IMO 2020
regulations in the short term. It is thought that the increased installation of
scrubbers will spur lines to reach for further market share with the continued
use of high-sulfur fuel seen as a competitive advantage.
While at the moment scrubber installations appear to present a good business case for mitigating rising fuel costs, the risk remains that the advantage provided could be short lived, as the production of high-sulfur fuel has downshifted in production from 3.5 million barrels per day to just 1 million barrels per day. Coupled with the potential of smaller bunkering hubs phasing out their high-sulfur supply reducing the number of ports where scrubber-outfitted vessels can operate, the risk of investment in scrubber installations becomes more significant.
Along with fuel supply limitations, scrubber regulatory backlash looms over carrier lines with several ports already banning the use of open-loop scrubbers. A representative of a scrubber manufacturer stated that two pending studies will help to relieve concerns regarding open-loop technology and result in a repeal of open-loop scrubber bans in the near future.