Scrubbers result in two-tier market for containerships
Owners of scrubber-fitted boxships reap fuel savings under IMO 2020
Owners of scrubber-fitted boxships have been cashing in during their first week of operating under IMO 2020 rules.
A wider-than-expected spread between the price of 0.5% sulphur-compliant fuel and high-sulphur fuel oil (HSFO) has been reflected in the containership charter market.
It has resulted in a two-tier charter market, with scrubber-fitted ships being fixed at higher rates.
Non-scrubber-fitted vessels, such as the 5,085-teu Miami (built 2008), have been reported as being taken for up to three months at about $13,900 per day.
But scrubber-fitted ships of a similar size are understood to have been taken for two years at charter rates believed to be about 30% higher.
Larger scrubber-fitted containerships carry an even higher premium. For example, the 8,586-teu Mediterranean Bridge (built 2011) has been taken by French liner operator CMA CGM for 10 to 12 months at $29,750 per day.
The vessel is one of two ships acquired by South Korea’s Sinokor Merchant Marine in 2017.
Five-digit savings
The fixtures come as the spread between HSFO and very low-sulphur fuel oil (VLSFO) has hit a high of more than $350 per tonne, according to Alphaliner on 2 January.
In Singapore, VLSFO was priced at $730 per tonne against HSFO at $365 per tonne.
The spread is expected to translate into five-figure dollar savings for large scrubber-fitted boxships.
A 13,000-teu containership consuming around 100 tonnes per day of fuel at a spread of $300 per tonne would reap fuel savings of $26,000 per day, according to Maritime Strategies International.
A price spread of $200 per tonne would still yield average cost savings over a year of around $17,400 per day, the analyst added.
Relatively few smaller containerships have been fitted with scrubbers, but some owners are poised to reap big savings.
German owner MPC Container Ships (MPCC) has retrofitted scrubbers on 10 feederships, most of which have longer-term charters of two to three years.
Based on a spread of $200 per tonne, these 10 retrofitted vessels will generate revenues of $54.2m in 2020, MPCC chief executive Constantin Baack said during a conference call.
He said a total of $18m of that is expected to be achieved from savings-sharing mechanisms, split between the charterer and the owner.
He added that a $50 rise or fall in the fuel spread would translate into a $4.5m difference in MPCC's Ebidta over 12 months.
Rush to yards
The economic advantage of scrubbers has resulted in a backlog of containerships looking to be retrofitted at shipyards, where vessels are being immobilised in yards for periods of five to eight weeks.
About 95 ships with a total capacity of 924,840 teu are inactive due to scrubber retrofits, accounting for 68% of the inactive capacity and 4% of the total cellular fleet, according to Alphaliner.
Some 56 are larger ships of 8,000 teu to 20,000 teu.
That has taken larger vessels out of circulation and resulted in firm rates for owners with larger units open for charter.
D Oltmann Reederei has secured $25,250 per day for the 6,500-teu RDO Conception (built 2006), which has been taken by Global Feeder Shipping of Dubai for up to five months.
The German owner acquired the vessel in October for $20m.
Some 382 containerships of 3.3m teu were fitted with a scrubber unit as of 3 January, which equates to 14.2% of the total containership fleet capacity, according to Clarksons.
Some 269 units of 2.4m teu were pending scrubber retrofits, more than 200 of which would be fitted this year.
The premium on scrubber-fitted vessels is likely to increase amid reports of containerships starting to gather at anchor while allegedly awaiting VLSFO from their suppliers.
But Alphaliner said the biggest losers will likely be smaller vessels of less than 2,000 teu, which will lose out in competitiveness as most are not fitted with scrubbers.