Germany’s Hapag-Lloyd – the world’s fifth-largest container carrier in terms of vessel capacity – has declared low sulphur fuel to be the “simplest” solution for complying with the 2020 sulphur cap.
In a newly-published note on its website, the company states that low sulphur fuels will be $150 to $250 more expensive per tonne than the heavy fuel oil that is currently used across the shipping industry. This is likely to increase global average prices per TEU by around 10 per cent.
Ship owners could also choose to install exhaust gas cleaning systems, also known as scrubbers, or switch to liquefied natural gas (LNG) to comply with the sulphur limit. However, Hapag-Lloyd says that there are serious challenges that accompany both options.
Scrubbers can operate in two modes: open and closed loop. The former removes pollution from exhaust gases and flushes it into the sea, while the latter stores the pollution in tanks on board – though this isn’t practical for long journeys.
“So far, these systems have not yet been used with large container ships, only with cruise liners and short sea ferries,” the note explains. “There is also the risk that regulations will change in the coming years and will prohibit flushing the pollution into the sea at all.”
Meanwhile, the capital cost of converting or building new ships to burn LNG is high, and there are only a small number of LNG bunker vessels available in global ports. There are also logistical limitations to how many ships can be converted to LNG or fitted with a scrubber.
“It also takes time to build new ships fitted with scrubbers or designed to burn LNG,” Hapag-Lloyd concludes. “The vast majority of the global container fleet will therefore have no other choice than to switch to the new, much more expensive compliant 0.5 percent sulphur fuel – or to break the law.”