Alphaliner chief analyst Tan Hua Joo has refuted “doomsday” predictions on the negative impact of the International Maritime Organization’s (IMO) 2020 sulphur cap.
Speaking at the TOC Asia Container Supply Chain conference, one of many events taking place during Singapore Maritime Week, Tan suggested that many of the forecasts given are unfounded and reminded attendees of the shipping sector’s resilience.
The analyst said: “This is the most important subject for the industry in the coming months. But there’s been some pretty catastrophic predictions being made, and while there’s a lot of uncertainty on IMO 2020, I don’t think these dire predictions are entirely justified.”
Some have estimated a US$50 billion cost to the maritime industry as a result of the new regulation, yet Tan has downplayed these projections and placed the cost at a much lower $10 billion.
The speaker also pointed to examples of the shipping sector adjusting well to new regulations, with the build-up to Sulphur Emission Control Areas (SECAs) in 2015 and the VGM container weight regulation in 2016 having caused similar uncertainty.
Over 10% of #container #ship global fleet will have scrubbers fitted by end 2020 to comply with @IMOHQ sulphur cap predicts Tan Hua Joo #alphaliner at #TOCAsia @TOCWorldwide pic.twitter.com/h3HiJPJakc
— Next Level Info (@Nextlevelinfo) April 9, 2019
Despite concerns, both of these events passed without causing serious disruption to the market.
Tan added: “Having said that, a $10bn bill is still an extremely large one for the industry to bare, and it’s suddenly the costliest IMO rule that’s ever been attempted. And the cost of producing 0.5% LFSO is very likely much lower than for the 0.1% spread.”
Hanjin’s demise was not a turning point for liner #Shipping, short lived capacity discipline has now vanished and freight rates are dropping again says Alphaliner’s Tan Hua Joo at #TOCAsia @TOCWorldwide pic.twitter.com/m6Batavu6C
— Next Level Info (@Nextlevelinfo) April 25, 2018
While the IMO 2020 ruling will have an impact, the Alphaliner expert has underlined that shipping lines and associated companies are already preparing for its arrival.
“Right now there’s a real sense of urgency from ship owners to take action and scrubber orders are constantly increasing.
“Based on the data we’ve collected, more than 20% of global container capacity will be on ships with scrubbers installed by the end of 2020 – which is much higher than initial predictions of 5-10%.”