| Summary: | Shipping has been cited as a major source of marine and air pollution, and also a major contributor of greenhouse gases. The International Maritime Organisation (IMO) has adopted many instruments to deal with these issues, with the latest being what is known as IMO 2020. This amendment to the MARPOL Convention, which entered into force on 1 January 2020, lowers the maximum allowable sulfur content in the ships’ fuel from 3.5% to 0.5%. Studies have been made with regards to the shipowners’ options for the compliance of IMO 2020. However, there is an absence of research in terms of the impact of IMO 2020 on charterers, which is the objective of this paper. To limit the scope, this paper will look at the Panamax bulk market. The available options for charterers are either non-scrubber vessels or scrubber-fitted vessels. The HSFO/VLSFO price spread affects the attractiveness of each option. When the price spread is wide, scrubber-fitted vessels are more attractive despite the high scrubber premium charged by shipowners. When the price spread is narrow, the scrubber premium will have to lower accordingly to remain attractive – especially for longer voyages. Other than economic factors, the report covers other factors like fuel availability, the prohibition of HSFO in Arctic waters, and increased black carbon emission in VLSFO. There is a slight restriction for charterers along the 6 routes of the Baltic Panamax Index (BPI) 82 as scrubber-fitted vessels need to run on compliant fuel in the restricted areas. The environmental sustainability issues with regards to the available options are not posing a problem to charterers currently. However, when the ban of HSFO in Arctic waters is implemented and should the banning of VLSFO in Arctic waters be successful, this could pose a problem for the vessels. Currently, the narrow HSFO/VLSFO price spread is caused by the overproduction of oil, and further worsened by the COVID-19 pandemic. However, prices are expected to go back to usual once the situation returns to normal. Bachelor of Science (Maritime Studies)
|
|---|