USD 2 billion
MSC senior vice-president Pasquale Formisano recently told the Propeller Club Basel about the ongoing adjustments to his shipping line’s fleet to 2020 and beyond.
The introduction is looming over the industry of the IMO’s global cap of 0.5% from 2020 onwards on the sulphur content in the heavy oil used as ship fuel – as is the corresponding passing on to shippers of the additional costs incurred by the measure. MSC created quite a furore with the introduction of a bunker recovery charge (BRC) on 1 January 2019. Senior MSC vice-president Pasquale Formisano, one of the men on board the line founded by Gianluigi Aponte from the very beginning, informed a Propeller Club Basel audience recently about the background to the move.
It is well-known that the IMO’s decision was not particularly welcomed by shipping lines. “All the lorries carrying out their road haulage tasks damage the environment substantially more,” Formisano pointed out. MSC’s new BRC enables full transparency for the trade, he underlined, “Only the true additional cost for the necessary adjustments will be passed on down the supply chain.”
Specifying clear goals
In any case, the costs entailed by the fuel changeover will be enormous. Whilst there is talk of a total of USD 60 billion for the entire shipping industry, around one quarter thereof or USD 15 billion, will have to be borne by the maritime carriers. MSC, which has decided not to pursue the option of alternative fuels, is planning to equip its fleet with scrubbers.
It already represents a massive challenge for MSC to acquire and install the 5.3 m high and 11 m wide scrubbers. It has estimated that the necessary measures in this context will cost it approximately USD 2 billion. On top of this there is the long 60 days that it takes to retrofit a vessel. Formisano indicated that this operational disruption may be absorbed by overcapacities in the market.
MSC is just one of the players subject to this trend. In autumn 2018 Clarksons estimated that no less than around 25% all new orders worldwide are for vessels with scrubbers.
