Japan’s third largest shipping company looks at all methods for compliance; MSC adds scrubbers on about one-tenth of fleet.
Two major shipping companies are laying out their plans for how they will comply with the pending global mandate to reduce sulfur emissions from ships.
The International Maritime Organization, the United Nations agency that regulates global shipping, will require that ships in international waters emit no more than 0.5% sulfur by 2020.
The mandate is poised to disrupt the maritime industry, which has long relied on cheap high-sulfur bunker fuel with sulfur content around 3.5%.
The major lines are now facing hard decisions on how to meet the mandate.
Low-sulfur marine fuel is one route. But it’s expected to cost nearly double the price of high-sulfur fuel by 2020.
Shipping companies can retrofit ships with a sulfur scrubber which allows for burning of lower cost high-sulfur fuel. But scrubbers themselves face questions over whether they too will be source of sulfur pollution in the ocean. In addition, the availability of high-sulfur fuel may also be in doubt as more tank storage is given over to low-sulfur fuel at bunkering hubs.
Ships can also use alternative fuels such as liquefied natural gas. But the expense of those engines and the limited supply of alternative fuels at ports will limit its availability.
Japan’s K Line (Tokyo: 9107), the ninth largest global shipowner by total fleet size, plans to take all three approaches with its fleet of 324 vessels.
In its annual report, the company said it plans to low-sulfur fuel, sulfur removal equipment and convert ships to run LNG. “We will proceed on a ship-by-ship basis, aware that we cannot limit ourselves to one particular measure,” the company said.
In addition to owning 37 container ships and being part of the Ocean Network Express alliance with Japanese peers Mitsui O.S.K. Lines (Tokyo: 9104) and Nippon Yusen K.K (Tokyo: 9101), K Line is a substantial owner of dry bulk vessels for carrying ore, coal and grains. The company has 101 dry bulk vessels.
Separately, Italy’s Mediterranean Shipping Company, which is part of the 2M Alliance with Maersk, is planning on fitting 29 of its 220 of its container ships with scrubbers at a Chinese shipyard. In July, the company signed a $198 million deal with Finland’s Wartsila for their scrubbers.