Global Shipping: IMO2020 & Related

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Platts debuts parallel IMO 2020 ship indices – and spread is huge

https://www.freightwaves.com/news/platts-debuts-parallel-imo-2020-ship-indices-and-spread-is-huge

 

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Platts poised to take on Baltic Exchange in dry freight futures

https://www.freightwaves.com/news/platts-poised-to-take-on-baltic-exchange-in-dry-freight-futures

 

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German giant Volkswagen Group said that a naming ceremony for Siem Car Carriers’ LNG-fueled vessels was held at Xiamen Shipbuilding’s yard in China.

The newly named Siem Confucius and Siem Aristotle will be deployed on the so-called America Round Tour from January 2020, from Emden to Mexico via several ports on the east coast of the USA. From there it will return via the US east coast to Emden.

The second ship will start its first major voyage along the 12,000 nautical mile route in spring 2020, VW said in its statement.

Vessels feature two liquified gas tanks with a capacity of 1,800 cubic meters each. That’s enough for a complete round trip, and it ensures a ten percent reserve tank, sufficient for several days.

Both new ships replace two of the nine cargo ships currently employed by Volkswagen on this round trip, which are conventionally powered by heavy oil.

According to the company, the vessels are the largest roll-on, roll-off (RoRo) ships with LNG propulsion ever built, and the first to be deployed overseas. So far, only smaller LNG-powered RoRo vessels have been built that are in service on short-sea trades.

The vessels are each 200 meters long and 38 meters wide, which makes them exactly as long, but almost six meters wider than the car carriers previously in service, which only have a width of 32.5 meters. This is due to the space requirements of the liquid gas tanks. They are powered by a 12,600 kW engine developed by MAN Energy Solutions.

Matthias Branka, head of overseas transport management at Volkswagen, said: “We are now gaining experience with the first two LNG ships. Then it will be our goal to increasingly focus on environmentally friendly propulsion systems for the other tenders that are due every five years.

“This could be more LNG vessels, which might also in the future be fueled with biogas or other new technologies. Worldwide there are many projects that study alternative ship propulsion and fueling methods.“

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Sour crude in sweet spot: Complex supply-demand recipe fires up price jump

With new emissions rules from the International Maritime Organization taking effect from Jan. 1, refiners had been expected to process more low-sulphur, or sweet, crude to produce cleaner bunker fuel for ships.

 

https://finance.yahoo.com/news/sour-crude-sweet-spot-complex-110111389.html

 

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https://community.oilprice.com/topic/6583-imo-2020/

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The Shipping Industry’s $1 Trillion Problem

 

The shipping industry must spend at least $1 trillion on new fuel technology if it is to meet UN emissions targets by 2050.
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According to a new study by experts from UCL and the Energy Transitions Commission, the minimum average that would need to be spent every year from 2030 is $50bn.

Global shipping is responsible for about 2.2 percent of the world’s carbon dioxide emissions. The International Maritime Organisation has set itself the target of reducing emissions by 50 percent by 2050.

If the sector was to fully decarbonise by 2050, an additional $400bn of investment would be needed over the 20-year period.

Roughly 87 percent of the investment would be in land-based infrastructure and production facilities for low-carbon fuels.

The remainder would be used for upgrades to the ships themselves.

Tristan Smith, reader at UCL’s Energy Institute, said: “Our analysis suggests we will see a disruptive and rapid change to align to a new zero carbon system, with fossil fuel aligned assets becoming obsolete or needing significant modification.”

In December the sector submitted a proposal to form a $5bn research and development fund for decarbonising the industry.

The fund, which will operate over a ten-year period, is designed to accelerate the development of commercially viable net zero ships by the early 2030s.

The International Maritime Research and Development Board (IMRB), as the fund will be known, will be financed by the payment of a mandatory $2 for every tonne of fuel a shipping company buys.

The study comes as the global shipping sector gears up for rising costs and new rules on the maximum amount of sulphur that will be allowed in their fuel.

The legislation from the IMO, which comes in to force on 1 March, is an attempt to reduce sulphur emissions by 80 percent.

 

 

 

 

The United States is sharpening its focus on enforcement of the IMO 2020 fuel sulfur emissions cap, which could result in harsh penalties for vessel operators caught attempting to sidestep the regulation.

In new guidance issued by the U.S. Coast Guard (USCG), vessels calling on U.S. ports will be expected to carry documents showing they are burning fuel with a sulfur content of no more than 0.5% while in international waters, a regulation that went into force on Jan. 1. In addition to burning lower-sulfur fuel, ships can comply by filtering emissions using a "scrubber" in the ship's smokestack or by using an alternative fuel such as liquefied natural gas.

Regulations tighten further on March 1, when a high-sulfur fuel carriage ban goes into effect and ships will no longer be able to carry noncompliant fuel in their bunker tanks.

Vessel industry representatives have been skeptical about the ability of regulators in the U.S. and around the world to keep unscrupulous shipowners from cheating by burning cheaper, noncompliant fuel — thereby gaining a significant cost advantage over those that comply.

The USCG emphasized in its updated guidance, however, that since the U.S. is bound to enforce the regulation, it "will review BDNs [bunker delivery notes] and check logs to determine whether the vessel is complying with the applicable fuel sulfur limit when operating beyond U.S. waters."

The agency also warned of potential shortages of heavy fuel oil with a maximum sulfur content of 0.50%. "As such, the 2020 sulfur caps may result in an unfamiliar grade of fuel that may consist of a mixture of heavy fuel oil and distillate fuel oil," it stated in the guidance. "Further, there is currently no accepted technical specification for such a fuel oil. This has raised concerns in the shipping industry that fuel quality and availability will vary considerably and, as a result, ships may have problems obtaining and/or burning certain fuel oil."

Those that choose to cheat — at least if caught in the U.S. — will be subject to "serious consequences," according to George Chalos, an attorney who specializes in maritime environmental compliance. In a recent editorial in The Arrest News, a maritime enforcement publication, Chalos noted that approximately 80 deficiencies and "over a dozen" enforcement actions have taken place in the U.S. for violations of international air pollution regulations, known as MARPOL Annex VI, by vessel owners.

Last year marked the first criminal prosecution of a MARPOL Annex VI violation pursued by the USCG and the U.S. Department of Justice (DOJ) in which two Greek vessel operators were each fined $1.5 million, and senior crew members were sentenced to three years' probation, during which they were not allowed to return to the United States on a ship.

 

 

 

"The failure to have compliant fuel on board of a vessel will be viewed as a failure of preparedness, not a failure of accessibility of resources," Chalos cautioned. "In addition, the DOJ perceives that there are vessels breaking the rules each day and strongly believes in its mission to seek out noncompliance and prosecute alleged criminal activity accordingly."

To show inspectors that they are complying with IMO 2020, Chalos advised that shipowners and operators keep critical documentation on their vessels, including:

• Bunker delivery notes, to be retained onboard for a minimum of three years
• Bunker transfer procedures, as well as preloading plan and declaration of inspection retained for at least thirty days
• Declaration that fuel conforms to MARPOL Annex VI and does not exceed maximum sulfur content
• Fuel changeover plan Oil Record Books (with accurate and timely information properly recorded)
• Fuel oil non-availability reports (FONAR).