Equipment manufacturers are reaping the rewards of two years of heavy regulation and scrubbers will only claim a higher share of the orderbook, Clarksons Research
Close to 90% of the global fleet will rely on low-sulphur fuels to comply with 2020 cap, Clarksons says
ONE in four vessels on order will be fitted with scrubbers ahead of the 2020 sulphur cap, with the past two years of landmark regulations drumming up business growth for manufacturers within the $221bn newbuilding orderbook, Clarksons has reported.
In an analysis penned ahead of the SMM Hamburg fair taking place next week, Clarksons Research managing director Steve Gordon claimed that the environmental rules that have come into effect since SMM 2016 have led to equipment suppliers cashing in on demand.
SMM 2016 kicked off two days after the International Maritime Organization’s Ballast Water Management Convention was ratified, followed by the 2020 sulphur cap less than two months later. More recently, the IMO agreed to slash emissions by at least 50% by 2050 in April 2018.
Owners may be increasingly advertising their decision to fit their ships with scrubbers or invest in liquefied natural gas fuel projects, but low-sulphur fuel, as expected, comfortably dominates as the preferred option to comply with the 2020 sulphur cap.
While 25% of the orderbook is catered to scrubbers and that share is expected to increase, only 2.6% the total fleet is set to have the abatement technology. Meanwhile, 11% of the orderbook and just 2.5% of the fleet is LNG-powered.
“More broadly, with oil prices at $75 per barrel (SMM 2016: $48 per barrel) and up to 90% of capacity likely to use more expensive compliant fuel at the start of 2020, fuel economics are very much ‘back in play’ providing opportunities for suppliers and yards targeting a global fleet 64% bigger than at the time of the financial crisis,” a Clarkson Research analysis from last week claimed.
And although China claims a 37% stake in of the orderbook in terms of compensated gross tonnage and almost 80% along with South Korea and Japan, Europe’s yards are raking in a sizeable income thanks to a 98% share of capacity of the $53bn of cruiseship orders.
The global orderbook, however, has been declining since 2015, accounting for 10% of the global fleet by capacity today, and shipyard output is expected drop by 10% during both 2018 and 2019.