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The 2020 Sulphur Cap. Are you ready?

10.06.2019 Maritime

In a little over 6 months the MARPOL Annex VI sulphur cap for bunkers will come into effect.   The new cap reduces the permissible sulphur content of fuel used on board vessels to 0.5% mm from 1 January 2020.

We outlined the key legislative requirements which operators must meet at the end of last year: https://bit.ly/2wIwrtH. BIMCO’s working group have now decided not to publish a scrubber clause for the time being, and our general comments on the fuel content and the transitions clause remain the same.

Most operators we have spoken to in recent months intend to use low sulphur fuel in preference to the cost and operational impact of fitting scrubbers.  However, experienced operators are becoming increasingly vocal in their concerns.

One key concern is that there will not be sufficient supply of low sulphur fuel in time to meet the increased demand.  This is something beyond an owner/operator’s control, yet it is they who will face regulatory sanction for breaches and the liabilities that flow from an engine breakdown.

This week President of the Union of Greek Shipowners, Theodore Veniamis, suggested the transition has been ‘tragically’ mishandled. 

“There are so many issues of implementation that need immediate tackling” he said.  “There is chaos, but no one is taking responsibility; everyone is trying to avoid liability”1.

The Union estimates that low sulphur fuel will only meet 55-60% of demand from 1 January 2020.  The IMO estimates low sulphur fuel will only meet 80% of demand.

The cap, and availability of fuel, throws up a number of issues.  As ever, the pro-active operators will fare the best.  Charterparties may need amending if they haven’t been already.  However, that is only a part of the solution.  Ship implementation planning should be undertaken to examine the risk of any new fuels and take steps to minimise their impact.  Procurement planning should be undertaken to ensure that your ships can get the fuel they need in the places that they trade and procedures should be in place to report the non-availability of compliant fuels.  Given the likelihood of an increase in off-spec claims arising from new blended fuels, the sampling and documenting of fuel delivered remains extremely important.

Although the marine fuel market may struggle to be ready for 1 January 2020, Ince is ready to help the industry as it overcomes these challenges. 

The Ince team are on standby to assist you as needed.  If you have any questions,  then please do not hesitate to contact the regional leads identified below or your usual Ince contact.

Reference:
 https://lloydslist.maritimeintelligence.informa.com/LL1127799/Greeks-bemoan-chaotic-sulphur-cap-implementation

Article authors:

Rory Macfarlane William Blagbrough