This week we review scrubber retrofits, tracking the vessels, yards and volume of tonnage involved. As activity ramps up, and with >1% of the fleet on an annualised basis projected to be off hire, shipping market fundamentals may get a helpful boost. But despite this ramp-up, looking ahead will it be long before our LNG fuel capable vessel count (~800 today) matches our scrubber vessel count (~4,000)?
Counting The Scrubbers…
Since the start of 2018, our count of scrubber installations (fitted, newbuilding and retrofit pending) has increased from ~400 to ~4,000 vessels, with 15% of global fleet capacity expected to be scrubber fitted by end 2020 (see previous IMO 2020 Impact Assessments). In our Graph of the Week the analysis focuses in more detail on the ramp-up of retrofit installations this year, using data from our ship repair and conversion database to identify the volume of tonnage undergoing retrofits at snapshots during the year.
This yard-by-yard data seems to support our earlier estimates that, on an annualised basis, approximately 1% of capacity in the major fleets would be off hire across 2019 (crude tankers 1.2%, containerships 1.1%, bulkers 1.0%). However, as expected, activity has ramped up during the year as we approach both fuel switchover and the deadline itself. In recent weeks, it seems that off-hire time is largest in the crude tanker fleet: 10m dwt and approaching 2.5% of the fleet.
Chinese yards dominate the retrofitting activity (the most active non-Chinese yards are Sefine in Turkey and Sembcorp in Singapore, ranking 15 and 16 – see graph inset). There has been debate about how long these retrofits will take, with anecdotal reports of both significant delays and also forward planning to reduce off hire time (our analysis has used 30 days as a rule of thumb). Our “Activity Days” show a lot of variety but the average seems to be trending upwards recently. Retrofits for ships that entered a repair yard in June took an estimated average of 37 days, up from 31 in March.
Supporting The Fundamentals
In our previous IMO 2020 Impact Assessment (see SIN), we mentioned that potential “wildcards” from IMO 2020 which might help tighten the market were becoming more “tangible”. In addition to the scrubber off hire time, we have tracked quantifiable declines in speed in the boxship fleet (~0.25 knots this year). Meanwhile the “boost” in tanker demand from greater refinery throughput (c.1m bpd) and changes in gasoil and fuel oil trades (net +0.3m bpd) seem on track.
Timing & Technology…
For granular data behind the Graph of the Week, and other data around technology and regulation, take a look at the World Fleet Register (WFR). The WFR tracks not just the impact of IMO 2020 but the broader accelerating environmental focus. With the LNG fuel capable fleet and orderbook now at ~800 vessels (and 170 ports expected to have LNG bunkering facilities by 2021) how long before this vessel count matches the scrubber count? Have a nice day!
The author of this feature article is Stephen Gordon. Any views or opinions presented are solely those of the author and do not necessarily represent those of the Clarksons group.