By Penny Thomas The IMO has set tough targets for the shipping industry to reduce emissions from its operations, and these mandates will rely heavily on technological advances and new government policy. As trade facilitators, port authorities will play their part too.
In the first of a two-part series, IAPH Managing Director Patrick Verhoeven is joined by John Michael Radziwill, CEO of C Transport Maritime, a dry cargo ship management company and GoodBulk, a shipowning company, to look at how the shipping and port sectors can support one another.
The discussion took place ahead of Radziwill’s appearance as an expert panelist at the IAPH World Ports Conference 2020.
Radziwill has been busy preparing his companies to meet the imminent IMO deadline – the 1 January 2020 fuel sulphur cap of 0.5%. He is well prepared for the disruption and the extra costs that compliance will bring; at up to 80% more expensive than heavy fuel oil (HFO), Radziwill said that ship operators must “be ready with their cash flow management”. These costs could be passed on to charterers, he said, “but you still need to have a much more working capital than before”.
The industry’s tank-cleaning operations began as early as May 2019 on those vessels that are not having scrubbers installed. Radziwill recommends that operators think strategically about the order in which ships are being cleaned, and this is dependent on the cost of very-low-sulphur fuel oil (VLSFO) at individual ports. “You’ll need to factor in at least a 30-90-day process to clean the tanks. To manage the cleaning process, some of our ships will use VLSFO in the near future [before the 1 January deadline] because at some ports the price differential is not huge. But at most ports, you’ll need more working capital ready to get you over financial bridge.”
Radziwill is aware of potential “potholes” such as different fuel mixes in different ports. “You need to be careful how new fuel interacts and you may have different fuel quality at different ports,” he said, adding that the VLSFO market will eventually settle and a network of trusted suppliers will emerge.
Radziwill asks ports to remain competitive and have an adequate supply of scrubber-compliant fuel and VLSFO fuel to match their turnover. Barges to transport the different fuel types – VLSFO, MGO, and HFO – will have to be cleaned, depending on fuel to be carried going forward, and available in the correct ratios and quantities.
Verhoeven sees these challenges facing shipping and agrees that ports’ responses to the sulphur cap are inconsistent. “We all share the issues – availability, quality, and assurance in the supply chain – but to what extent ports are involved in the process is different across the globe” He pointed to Rotterdam and Singapore as examples of ports that have been active in preparing for VLSFO bunkering operations, but notes that others may not have the necessary jurisdiction to deal with bunkers.
“At the last MEPC meeting, the International Chamber of Shipping and BIMCO proposed that port authorities take responsibility for monitoring ships’ fuels, but IAPH pointed out that in some states it may not be port authority’s mandate, but other parties’ responsibility,” Verhoeven explained. “There is a lot of institutional diversity.”
What IAPH can do is encourage its port members to take an interest and control the situation where they can, he said, noting that the organisation has developed tools to help members navigate the changes and support shipping. “Whether we are talking about fuel provision or single windows, we want to make the network more cohesive and customer-friendly, but we can’t change the institutional diversity overnight,” he said. “All we can do is create tools to allow port authorities to step into these conversations.”
“The checklists and accreditation tool we developed for safe bunkering of LNG fuel is a good example, which we are now extending to other clean marine fuels,” Verhoeven added.
Part two of this special debate will be published next week.
These issues will be further addressed by Radziwill at the World Ports Conference 2020 during a special panel on ‘IMO 2050: is the shipping industry on track to meet greenhouse gas targets’. He will be joined on the 18 March panel by an impressive list of supply chain thought leaders:
- Emanuele Grimaldi – Managing Director, Grimaldi Group
- Guy Platten – Secretary General, International Chamber of Shipping
- Kasper Søgaard – Head of Research, Global Maritime Forum
- Katy Ware – Director of Maritime Safety and Standards & Permanent Representative of the UK to IMO, UK Government
This article was excerpted from the November/December 2019 issue of Ports & Harbors, the official journal of the International Association of Ports & Harbors. To learn more about subscribing, email firstname.lastname@example.org.