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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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HMM CEO evaluates 2020 fuel compliance options, says tech solutions should be shared

'Many options and related uncertainties' are making decision-making difficult, says C.K. Yoo.

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Updated on 16 Oct 2017 12:53 GMT

The CEO of container line Hyundai Merchant Marine (HMM), C.K. Yoo, has evaluated what he considers to be the three main compliance options to meet the upcoming 0.5 percent global sulphur cap on marine fuel in 2020.

Speaking at an event in Shenzhen, China, Yoo stressed that "we need to double our efforts" to seek compliance solutions via maritime technology and that these solutions should be shared by all industry stakeholders "for the common good of mankind, protection of environment".

Yoo said cooperation between authorities and maritime technology institutions would help to reduce the cost burden in investments related to compliance.

"We, at HMM, are committed to the sublime principle of protecting environment and we are willing to share technical solutions as they are identified," Yoo remarked.

0.5% fuel, scrubbers and LNG

Yoo said that of all the upcoming regulations, sulphur compliance "seems to be the most serious one in magnitude".

The three main 2020 compliance options highlighted by Yoo during his speech were 0.5 percent fuel, the installation of scrubbers (combined with the use of high-sulphur fuel), and liquefied natural gas (LNG).

Regarding low-sulphur fuel, Yoo pointed out that shipping companies have become familiar with their use in Emission Control Areas (ECAs), but noted that prices of low-sulphur fuel oil or low-sulphur marine gas oil (MGO) are more than 50 percent higher than that of heavy fuel oil (HFO).

"Furthermore, it is very difficult to forecast the price of low sulphur fuel oil in 2020, not to mention its suppliability region-wise," Yoo added.

Discussing scrubber technology, Yoo noted that their use would enable ship operators to keep using HFO, but that the installation cost was "expensive" and would take more than 10 months for them to be installed on new ships. For old ships, it would require additional dry docking period," the HMM CEO observed.

Additionally, Yoo said scrubber solutions could incur a sludge handling cost for dry or hybrid scrubbers and noted that retrofitting scrubbers on existing ships will result in the sacrifice of cargo space.

"The smaller [the] ships you may operate, the more sacrifice in loadability you will suffer," he remarked.

Yoo noted that LNG "has been known [to be] the best fuel to comply with the upcoming regulations", and a popular solution for passenger ships. Also, LNG-fuelled engines are already widely used in onshore applications.

However, commenting on the drawbacks, Yoo said LNG was an expensive solution for newbuilds - requiring more investment than scrubbers. He also noted that the lack of LNG bunkering locations worldwide was "a problematic point".

Technically, Yoo stressed that the issue of methane leakage - also known as 'methane slip' - had to be resolved as well as the loss of cargo space due to bigger LNG storage.

Yoo also added that the future price of LNG was as difficult to predict as those of other types of fuel.

Yoo concluded that the "many options and related uncertainties make it difficult for shipping lines to make decisions to deal with this low sulphur issue".

Whichever option shipping lines choose, Yoo said it is "inevitable" that it will incur "sizeable" costs and investment.

Eco-mega containerships

Yoo pointed out that the 'eco-mega' containership concept of the early 2010s was developed as a solution to high oil prices during the period. This was made possible by the advancement of maritime technology and engineering know-how, which not only shortened the ship construction cycle but also catered to the needs of ship operators faster.

"In the beginning, shipping lines responded to soaring bunker price with slow steaming, until eco-mega containerships were introduced to the market with the help of maritime technologies accumulated over the years," Yoo said.

Yoo also commented that if Malcolm McLean had had support from the latest maritime technology or if high oil prices had persisted in the 1980s, the fate of his Jumbo Econships might have been different.

Image: Hyundai Merchant Marine's (HMM) Hyundai Dream. Credit: Hyundai Merchant Marine

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