International Bunker Industry Association: Challenges ahead

International Bunker Industry Association: Challenges ahead

London: The bunker industry is facing some challenging issues at the moment and the very low cost of fuel is impacting the industry in a number of ways, explains Captain Peter Hall, chief executive of the International Bunker Industry Association (IBIA) in today’s Maritime CEO interview. The first being that the low fuel price is complimenting very low freight rates, particularly in the dry bulk sector and it is probably only the tanker market that is seeing good chartering rates at the moment. The other factors are as a result of the fuel prices; it appears that distillate fuel is the option of choice for ECA (Emission Control Area) compliance, which is not helping wider fuel adoption strategies in the long term.

“The market generally thinks that it will be at least 18 months before there’s an increase in fuel prices, and indeed a number have suggested that it may be closer to three to five years before recovery,” Hall says. This is because of the investment in shale in the US contributing to oversupply in the market. “The oil and gas majors are quite simply committed, the sites can’t just be shut down until they are exhausted, so oversupply will continue until that point is reached,” Hall reckons.

The industry is also having to get to grips with a raft of regulations relating to the emissions of CO2, NOx, SOx and particulates. The EU has started to issue papers defining what those changes will mean in practice. This includes the EU MRV (Monitoring, Reporting, Verification) proposal which will monitor the efficiency of ships, although where ultimately this will lead is a big question.

“Overall it will mean a greater cost for shipowners and operators in meeting environmental and efficiency standards, raising a very significant question – how is compliance actually going to be enforced?” Hall questions.

Broadly speaking the industry has taken the implementation of the 0.10% SOx fuel standard, introduced at the beginning of this year for ECAs, in its stride, Hall thinks. He notes with interest the marked shift from residual fuels to distillate.

“At the beginning of the year, the split was roughly 80-20, but our feedback from the testing agencies indicate that it is now closer to 50-50 in all regions. Shipowners seem to have moved from one to the other relatively smoothly,” says Hall, who has over 40 years’ experience in the marine industry and has served as a CEO of a major international port and as a ship operator.

The indecision regarding the implementation of the global sulphur cap in 2020 (or 2025) is something IBIA has strong views about.

“We question how compliance with the new sulphur emission regulations will actually be enforced, post-2020, and with this in mind, IBIA has already suggested that one solution might be to make it illegal to carry non-compliant fuels on board a vessel without a certified abatement system,” Hall suggests.

In 2016, IBIA will be launching a new benefits package for members which will include a travel club, careers guidance and training.

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