IBIA 2020 Working Group survey results: What owners want
IBIA has set up a 2020 Working Group to help our members make sense of the transition to the upcoming 0.50% marine fuel sulphur limit. As part of this work, we think it is important to understand what owners want and when/how they intend to comply. Hence, we came up with a number of questions which has been put to a cross-section of shipping companies.
The survey was conducted by one of our 2020 Working Group members, Rob Phillips. He is bunkering manager at ArcelorMittal and Chairman of the Institute of Bunker Buyers and Consumers, which joined IBIA in January this year.
A broad range of ship types are represented in the IBBC membership and there were 18 respondents to the survey, including some big players, so it should give a good cross-section of ship types and covers a large number of ships.
Here are the survey questions and a summary of the results.
- How long prior to 1 January 2020 can we expect that owners will start to buy 0.50% compliant fuels?
About 39% have indicated they are likely to start buying fuel 1-2 months before 1st January 2020, while a further 11% indicated they would start to buy even earlier than 2 months before, suggesting that in total 50% of owners will buy at least 1 month before or longer. About 33% indicated they would start buying 2-4 weeks before. 17% indicated they will not purchase 0.50% compliant fuel until after 1st January 2020, using 0.10% in the meantime.
- Will owners/operators prefer to buy mainly products fitting into the distillate table in ISO 8217 (e.g. DMA/DMB/DMC) or will they be happy to buy fuel blends that are not pure distillates and hence may be designated as RM grades?
65% of owners who answered indicated they will prefer to buy distillates, while only 12 % indicated a preference for fuel blends. However, the remaining 23% indicated they would use both equally.
- Will owners/operators prefer to buy both 0.10% and 0.50% sulphur fuels or will some adopt a uni-fuel policy and run only on 0.10% continuously?
Most vessels already have capabilities to store and use two different grades so this will depend on the discount for 0.50% against 0.10% and the difference in calorific value and any technical difficulties in burning the 0.50% product. Logically 0.10% tank storage will remain the same while 3.50% tank storage will be switched to 0.50% so any owners who are currently using the two grades are likely to continue after 2020 with the two new grades.
- Are we likely to see an upsurge in scrubber orders any time soon?
While the vast majority had not invested in scrubbers, the majority of these (about 56%) indicated they were very unlikely to invest before 2020 if the economic case remains the same, while 37% were still undecided. Only 6.5% of those who had not invested indicated they were very likely to invest. The biggest reason cited not to invest was concerns over future regulatory changes, closely followed by concerns over availability of HSFO and concerns over payback time. 23.5% expected the premium for 0.50% compliant fuel to be lower than projected. However, only 12% were not investing because they expected the price of scrubbers to come down. 23.5% expressed concerns about the suitability of their vessel or engine types for scrubbers, citing concerns that their vessels were too small or had insufficient space on board. Other reasons for not investing given were high CAPEX and OPEX.
- Where do owners/operators expect to be able to buy HSFO in 2020?
Owners who invested in scrubbers would expect to buy HSFO in all ports they are currently bunkering.
- Will owners change where they take bunkers in 2020?
Yes if there are changes in comparative pricing levels for the new grades, or if forced to through lack of availability of preferred products at their current buying ports.
- Will Owners/operators take stems of a similar size as today or will they prefer to bunker “often and little” in 2020?
If using only two grades (one of 0.50%, one of 0.10%) there is no reason for owners to take smaller size stems after 2020, actually the opposite may be the case if there is less availability in some ports, so bigger stems may be taken in ports where there is availability. Tank size configuration will not be any more of a factor than today, as ships are already running on a 2 grade system. However if owners are using multiple grades then stems will likely need to be smaller
- How confident are Owners that there will be sufficient 0.50% product available to meet demand from 1st January 2020?
67% of those who responded are either certain or very confident that there will be sufficient 0.50% product available to meet demand, while 33% indicated they were not confident.
- What will it take for Owners/operators to choose alternative fuels (LNG / Methanol / LPG / Biofuel) and to what extent will this play a role in 2020-2025?
Good supply infrastructure at major ports was cited as the most important incentive (72%), followed by significant cost savings on the fuel (50%). 33% advised they would be incentivised by signs that other owners are investing. 6% of owners cited alternative fuel being environmentally friendly as an incentive while a similar percentage indicated that only legislation that required the investment would be sufficient to incentivise the use of alternative fuels.