[110918.EN.BIZ] ONE Bets On Hybrid Fuel, Not Scrubbers, Though Options Still Remain Open

SINGAPORE based Japanese ocean carrier Ocean Network Express (ONE) says that it will opt for low-sulphur "hybrid" fuel to meet requirements of the IMO 2020 sulphur emissions regulations, and will evaluate scrubbers and LNG as alternative options going forward.

ONE, the merged container operations of NYK, MOL and "K" Line, said that it will rely on low-sulphur fuels without making major modifications to its vessels, reports Fort Lauderdale's Maritime Executive.

"We identified this as one of the most realistic and cost-efficient solutions, to enable ONE to be compliant by 1 January 2020," the line said in a customer advisory.

According to classification society DNV GL, "hybrid" fuels are hydrocarbon blends that have similar specifications to HFO but contain different substances, potentially including refinery products that have not traditionally been used as marine fuel.

They generally have good combustion properties, but some are vulnerable to wax formation when cooled, said the MarEx report.

Scrubbers are a retrofit option for several of ONE's vessels, but would require sacrificing cargo space and taking each vessel out of service for more than a month.

Building new vessels with scrubbers is a potential option for the future, but as newbuilding lead time is in the range of two to three years, it is not a compliance option for the January 2020 deadline, it said.

As other container carriers have suggested, ONE says the use of low sulphur fuels will come at a cost. The current market price difference between tandard HFO and low sulphur gas oil is roughly US$150-200 per tonne, and ONE expects this price premium to increase after January 2020 due to higher demand for compliant fuel.

Hapag-Lloyd estimates the price differential will be about $150-$250 per tonne, enough to raise the average price per TEU for ocean carriage by $80-$120, or about 10 per cent.

Leading ocean carrier Maersk recently warned that its fuel bill will rise by 50 per cent due to the impact of the IMO regulations, an increase equal to about $2 billion annually. Overall, analysts expect that the industry-wide cost will be about $60 billion per year.

Costs will likely begin to rise in the final quarter of 2019, as carriers will begin bunkering with low sulphur fuel early in order to be compliant on January 1, 2020.

Source : HKSG.