Maritime Act of 2020 and pending carbon tax effects

[George Welsch + 1]

I am wondering over the upcoming Maritime Act of 2020. Are the proposed regulations to reduce the sulphur emissions on all sea going vessels

still on track for enforcement on 1/1/2020. Has the shipping industry adapted there vessels for 2020 compliance ?

Has China and the Pacific Rim nations going to comply with the new regulations. It seems to me that a large portion of global trade comes from the Far East ?

China president Xi chairman of the Central Military Commission has released a press release to Reuters on or around 1/4/19 for its military to be battle ready to protect and develop strategic opportunities for China future development ? 

While the Europeans demonstrate by burning down the country they support are the Chinese loading their GUNS ?

[Karl V + 33]

My guess is , that there is so much money in global shipping , that the owners and charterers will adjust to the markets they head to . Singapore said , that it will not allow loop scrubbers in it's ports , smaller vessels will be too expensive to add scrubbers , and recently oilprice.com wrote , that there had been a very high amount of tankers demolished in 2018 , pointing to low charter rates .

 

Ship owners will shift to environment friendlier technology , just to spare legal hassle , and able to demand higher charter rates , since such ships will be universally deployable everywhere . Older ships of ages 20+ will be scrapped year for year , and there will be only newer engine technology available at the few giant shipyards left over worldwide .

 

 

[Refman + 207]

Prepare for diesel prices to rise even higher

[Karl V + 33]

Large ships will be fueled by Liquified Natural Gas ( LNG ) , even crude carriers .

 

Quote

As the maritime industry continues to build on its efforts to reduce emissions to air, LNG as a ship fuel is attracting a great deal of attention across many ship sizes and types.

https://www.hellenicshippingnews.com/dnv-gl-awards-aip-to-daehan-shipbuilding-for-lng-fuelled-aframax-design/

 

There will be a transition phase , but prices for low sulphur maritime fuels will decrease .

Bunker Rates

[Rasmus Jorgensen + 1,169]

On 1/5/2019 at 1:40 PM, George Welsch said:

I am wondering over the upcoming Maritime Act of 2020. Are the proposed regulations to reduce the sulphur emissions on all sea going vessels

still on track for enforcement on 1/1/2020. Has the shipping industry adapted there vessels for 2020 compliance ?

Has China and the Pacific Rim nations going to comply with the new regulations. It seems to me that a large portion of global trade comes from the Far East ?

 

My guess is that atleast the intercontinental carriers will need to find a way to comply. What I am hearing is that atleast Europe will enforce this. There will likely be some regional trades where cheating is possible. All newbuilds will incorporate new technology of some kind. 

[Guillaume Albasini + 851]

There is an overcapacity in the world merchant fleet. The 2020 regs will bring an incentive to scrap the older and inefficient ships and reduce the overcapacity.

The new regs will add increased cost to adapt the fleet but could also help to rise the earnings for the shipping industry, the overcapacity reduction rising the shipping prices.

[Joseph Scarafone + 20]

It's b.s. and I don't think Trump will impose/enforce it on U.s., personally.     

[Illurion + 894]

On 1/5/2019 at 10:14 AM, Karl V said:

Large ships will be fueled by Liquified Natural Gas ( LNG ) , even crude carriers .

 

https://www.hellenicshippingnews.com/dnv-gl-awards-aip-to-daehan-shipbuilding-for-lng-fuelled-aframax-design/

 

There will be a transition phase , but prices for low sulphur maritime fuels will decrease .

Bunker Rates

Jaxport is already there:

https://www.jaxport.com/corporate/major-growth-projects/liquefied-natural-gas

http://jaxlng.com

Two LNG powered LNG Tankers carry exported LNG to Puerto Rico.

[Guillaume Albasini + 851]

CMA-CGM, the third larger container shipping company decided to build a brand new fleet of large LNG powered container ships.

The first one was completed at Wenchong Shipyard in China last month. The vessel is the first of four LNG-fuelled newbuilds ordered by CMA CGM subsidiary Containerships. The remaining three are due to be delivered in the first half of 2019.

https://www.lngworldshipping.com/news/view,cma-cgm-takes-delivery-of-first-lngfuelled-container-ship_56242.htm

https://www.lngworldshipping.com/news/view,cma-cgms-lng-strategy-wins-most-accomplished-award_56111.htm

 

I think after some years of falling newbuilds the shipyards worldwide will enjoy the new 2020 fuel regulations pushing for an update of the world fleet.

[Rasmus Jorgensen + 1,169]

1 hour ago, Joseph Scarafone said:

It's b.s. and I don't think Trump will impose/enforce it on U.s., personally.     

It doesn't really matter what Trump does as long as a good chunk of the rest of the world does.

[Joseph Scarafone + 20]

..it matters if we can sell cheaper as a result.  If somebody told you to jump off a cliff, would you?  This whole AGW thing is stupid, dumb.  

[Rasmus Jorgensen + 1,169]

4 minutes ago, Joseph Scarafone said:

..it matters if we can sell cheaper as a result.  If somebody told you to jump off a cliff, would you?  This whole AGW thing is stupid, dumb.  

The point is that if enough countries enforce this then the economic benefit of having a ship that sails on heavyfuel (without scrubbers) will disappear, because :

1) ships need to be able to call all ports around the world (especially big container ships and bulkers). This is basic knowledge of trade patterns. 

2) Once critical mass is reached heavyfuel will become increasing expensive, because fewer and fewer refineries will make it. 

It is simple economics, really. 

As mentioned - there will likely be some regional trades where cheating is possible, but eventually item 2 above will kick in.

[Joseph Scarafone + 20]

You could be right, but the big three will have to endorse it or I wouldn't waste the money converting.  The economic principles have been used as you've described in California re: AGW law to achieve the stated goals.  The state pension fund is $1 Trillion upside down, people are evacuating CA as we speak.    

It looks good on paper if you're an AGW believer, but will it work?   What will the unintended consequences be, that's the $64k question.  

[Boat + 1,315]

The change in pollution rules for tankers is the biggest win globally for greenies, ever. Not much news coverage though. Little out of Trump. Is the deep state collapsing?

[Janet Alderton + 124]

13 hours ago, Joseph Scarafone said:

It's b.s. and I don't think Trump will impose/enforce it on U.s., personally.     

Hi Joseph,

The U.S. and Canada are already enforcing an even stricter standard of 0.1% maximum sulfur within 200 nautical miles of their coastlines. 

https://www.epa.gov/regulations-emissions-vehicles-and-engines/international-standards-reduce-emissions-marine-diesel

Edited January 9, 2019 by Janet Alderton
grammar

[Illurion + 894]

15 hours ago, Joseph Scarafone said:

It's b.s. and I don't think Trump will impose/enforce it on U.s., personally.     

New ships will be needed,  and they will almost certainly be built for more efficient fuels such as LNG.

2 new LNG ships are already operating out of the USA now.

More will follow,   and i do not think there will be a reason for Trump to get involved.

The market will resolve the problem.

[Joseph Scarafone + 20]

..any nat gas stock suggestions? 

[Janet Alderton + 124]

Hurray for the markets!

[Illurion + 894]

On 1/9/2019 at 12:25 AM, Joseph Scarafone said:

..any nat gas stock suggestions? 

Tote and Crowley Maritime are the owners of Americas first two LNG Fueled Container ships.

They transport LNG to Puerto Rico.

They are based out of JAXPORT in Jacksonville Florida.

They also have two more LNG Fueled Ships coming online within the next year.

https://www.lngworldshipping.com/news/view,jacksonville-the-premier-us-lng-bunkering-port-moves-into-higher-gear_51438.htm

The above link talks about the ships, and the port infrastructure that supports them.

These companies are not Nat Gas Stocks,  but money can be made in the Infrastructure Companies that MOVE the Nat Gas.

Hope this helps.

Edited January 10, 2019 by Illurion

[DanilKa + 443]

23 hours ago, Joseph Scarafone said:

..any nat gas stock suggestions? 

Cheniere liquefies nat gas but it is not given that it will be used in maritime shipping. Diesel is easier choice. May look outside US as bulk of its crude production require blending to be refining-ready. 

[ronwagn + 6,290]

On 1/8/2019 at 5:35 AM, Joseph Scarafone said:

..it matters if we can sell cheaper as a result.  If somebody told you to jump off a cliff, would you?  This whole AGW thing is stupid, dumb.  

Natural gas is cheaper and cleaner than diesel so it is a win win for everyone. The only losers are those who cannot afford the transition. They will be losing profits by using more expensive diesel. Diesel prices will drop eventually until it is replaced by LNG in a few decades.

[Jan van Eck + 7,558]

Reviewing the posts above (and before),  I would regret to say that you fellows are missing the dynamics going on inside the shipping industry. 

As to the various posts of Illurion, the ships with LNG as a fuel are purpose-built for the transport of LNG.  The liquid being transported has a boil-off rate, as boil-off is the method used to keep the rest of the cargo load cooled and liquid.  The tanks are absorbing heat from both the sun and from the local environment, so either there is continual re-compression or the gasified part has to be expelled as lost into the atmosphere.  What the ship designers do is feed the boil-off to the ship engine so that it is not wasted. 

As to the post of Janet,  yes those regulations are in place, and the way they are dealt with is to shift over the main engine fuel from the bunker "C" tank to the light diesel tanks. LPlus, most engines designed to run on Bunker C actually cannot start on that  (although the latest offerings from Wartsila actually can).  So the drill is to switch over to light diesel outside the port, steam in on light and simultaneously fill the inlet and outflow pipes with light, and then shut down after at dock.  When it is ready to re-start the main engine, it now starts on light diesel as all the fuel lines are now filled with diesel.  Then after the engine is all warmed up and the heaters inside the first bunker C tank to be drawn on have worked their magic to reduce the viscosity and bring it up to operating temperature, the main engine gets switched over by  opening and closing valves.   Although there are ports with regulations requiring running on diesel when approaching, in reality that is the industry practice simply to introduce light diesel to those fuel lines, otherwise you get into big problems trying to start a cold engine. 

Ron's delight in natural gas as a main engine fuel is all very nice, but two things work against it.  The existing ships do not get "changed over" as for safety reasons the nat gas tanks have to be up on the rear weather deck, open to the sea air from behind, so as to dissipate any leakage.  There is not enough real estate on most ships to accomplish that, so that approach is for a newbuild.  Second, nat.gas has a lower energy density than diesel (or nuclear) and you end up with either reduced range or less cargo capacity for the same length of ship.  SO you are not going to see many ships built that way. 

Guillaume's post describing a new fleet of nat-gas ships for the main Chines carrier overlooks that China had made an internal decision that it would be the dominant player in heavy-ship construction, and its banks have financed a large number of heavy-ship construction yards, but they got carried away and now have more yard capacity than orders to keep them operational, and some yards have had to go into bankruptcy.  The desire to have a fuller order-book has pushed China's govt to finance natgas ships, so that they can gain experience building them and then have a manufacturing advantage over competing yards in other countries.  This is typical of the Chinese.  Also China is getting shut out of the USA market for steel (and aluminum) and thus needs a new home for their rolled plate;  what better place to absorb vast tonnage of plate than shipbuilding?

George asks if the IMO regs are on track to be imposed.  That answer is "maybe."  They might be inside Europe, and in the North Sea, the Kattegat, the Baltic.  Whether it sticks out on the North Pacific Ocean or the South Atlantic Ocean is anybody's guess.  Personally, I think not. I don't see Nigeria enforcing.  Nor Brasil nor Argentina. Probably not South Africa. Lots of ports to go pick up bunker on the cheap. 

Joseph points out the prevailing shipowner philosophy that "I wouldn't waste money converting."  The ship owners take the view that the sterilization of fuel should be done off-boat, and the fuel to be supplies should be to specifications by the fuel vendors.  There is quite a bit of logic in that.  So, in sum, Joseph is on the money.  Cheers.

[Rasmus Jorgensen + 1,169]

11 hours ago, Jan van Eck said:

Reviewing the posts above (and before),  I would regret to say that you fellows are missing the dynamics going on inside the shipping industry. 

As to the various posts of Illurion, the ships with LNG as a fuel are purpose-built for the transport of LNG.  The liquid being transported has a boil-off rate, as boil-off is the method used to keep the rest of the cargo load cooled and liquid.  The tanks are absorbing heat from both the sun and from the local environment, so either there is continual re-compression or the gasified part has to be expelled as lost into the atmosphere.  What the ship designers do is feed the boil-off to the ship engine so that it is not wasted. 

As to the post of Janet,  yes those regulations are in place, and the way they are dealt with is to shift over the main engine fuel from the bunker "C" tank to the light diesel tanks. LPlus, most engines designed to run on Bunker C actually cannot start on that  (although the latest offerings from Wartsila actually can).  So the drill is to switch over to light diesel outside the port, steam in on light and simultaneously fill the inlet and outflow pipes with light, and then shut down after at dock.  When it is ready to re-start the main engine, it now starts on light diesel as all the fuel lines are now filled with diesel.  Then after the engine is all warmed up and the heaters inside the first bunker C tank to be drawn on have worked their magic to reduce the viscosity and bring it up to operating temperature, the main engine gets switched over by  opening and closing valves.   Although there are ports with regulations requiring running on diesel when approaching, in reality that is the industry practice simply to introduce light diesel to those fuel lines, otherwise you get into big problems trying to start a cold engine. 

Ron's delight in natural gas as a main engine fuel is all very nice, but two things work against it.  The existing ships do not get "changed over" as for safety reasons the nat gas tanks have to be up on the rear weather deck, open to the sea air from behind, so as to dissipate any leakage.  There is not enough real estate on most ships to accomplish that, so that approach is for a newbuild.  Second, nat.gas has a lower energy density than diesel (or nuclear) and you end up with either reduced range or less cargo capacity for the same length of ship.  SO you are not going to see many ships built that way. 

Guillaume's post describing a new fleet of nat-gas ships for the main Chines carrier overlooks that China had made an internal decision that it would be the dominant player in heavy-ship construction, and its banks have financed a large number of heavy-ship construction yards, but they got carried away and now have more yard capacity than orders to keep them operational, and some yards have had to go into bankruptcy.  The desire to have a fuller order-book has pushed China's govt to finance natgas ships, so that they can gain experience building them and then have a manufacturing advantage over competing yards in other countries.  This is typical of the Chinese.  Also China is getting shut out of the USA market for steel (and aluminum) and thus needs a new home for their rolled plate;  what better place to absorb vast tonnage of plate than shipbuilding?

 George asks if the IMO regs are on track to be imposed.  That answer is "maybe."  They might be inside Europe, and in the North Sea, the Kattegat, the Baltic.  Whether it sticks out on the North Pacific Ocean or the South Atlantic Ocean is anybody's guess.  Personally, I think not. I don't see Nigeria enforcing.  Nor Brasil nor Argentina. Probably not South Africa. Lots of ports to go pick up bunker on the cheap. 

Joseph points out the prevailing shipowner philosophy that "I wouldn't waste money converting."  The ship owners take the view that the sterilization of fuel should be done off-boat, and the fuel to be supplies should be to specifications by the fuel vendors.  There is quite a bit of logic in that.  So, in sum, Joseph is on the money.  Cheers.

Jan, 

I generally agree, but a few points to note:

1) There are technologies such as scrubbers and I hear also experiements with nano-tech that can clean the fuel onboard. At the expense of higher CAPEX these will reduce OPEX

2) Intercontinental carriers / Owners will need some compliant vessels to be able to be truly intercontinental

3) The IMO 2020 does give enviromentalists a leg to stand on and Owners complying will lobby for enforcement as they will have a competetive advantage. 

[Jan van Eck + 7,558]

4 hours ago, Rasmus Jorgensen said:

Jan, 

I generally agree, but a few points to note:

1) There are technologies such as scrubbers and I hear also experiements with nano-tech that can clean the fuel onboard. At the expense of higher CAPEX these will reduce OPEX

2) Intercontinental carriers / Owners will need some compliant vessels to be able to be truly intercontinental

3) The IMO 2020 does give enviromentalists a leg to stand on and Owners complying will lobby for enforcement as they will have a competetive advantage. 

Not really, Rasmus.   Here's why:

(1)   Yes, the scrubbers do exist, but they are quite expensive  (figure on $2.5 million) and there is very limited real estate on a big freighter to place them.  You have to take the ship out of service to retrofit and install, and that is costly.  Then there is the problem of dealing with the removed sulfur;  yes, it can be dumped overboard to get rid of it, but you already know that that approach is headed for a collision with the Greens. So now the shipowner has to give up real estate, give up earnings by docking his boat for the installation, and has further expenses to store and offload and dispose of the sulfur on an on-going basis.  Nobody wants to do that. 

As for nanotech, you are burning the fuel at the rate of perhaps 24 tons/day.  Your nanotech cannot keep up with that consumption rate.  Hopeless. It needs time to do its work. 

(2)   Any existing vessel is instantly compliant by simply pumping refined diesel into the tanks.  End of issue. 

(3)   Nobody has a competitive advantage if everybody ignores on-board scrubber installation and looks to the fuel suppliers to provide compliant fuels.  Everybody has to buy fuel. 

I would also add that, if the new on-site oilsands separation process ends up being a great success, then the boat owners can go back to buying bunker, as the preliminary results from the new solvent process is total removal of contaminants. Personally I think the dual-solvent approach is going to be a big winner.  Remember that diesel from the dual-solvent approach yields a fuel with a cetane rating of 75, which is a very long way upstairs from 42 that you get at the truck-stop today. 

Never underestimate the potential of new technology.  Oilsands will be the new shale, except that it will likely actually work and make a huge profit.  Always helpful. 

[ronwagn + 6,290]

On 1/8/2019 at 9:42 AM, Boat said:

The change in pollution rules for tankers is the biggest win globally for greenies, ever. Not much news coverage though. Little out of Trump. Is the deep state collapsing?

Greenies would prefer electric ships run by a combination of sails, kites, solar, and virtue emissions. Natural gas is a fossil fuel that is cheaper and cleaner but they can't get by the fossil thing.