After raising no objections to the 2.4% fleet growth projected for 2019, a panel of dry bulk owners say the 300 ships expected to head into shipyards in 2019 to install scrubbers means an effective fleet reduction of up to 4%.
VESSELS taken out of service in 2019 for scrubber installations will reduce the fleet supply by as much as 4%, a panel of dry bulk ship owners agreed.
“The market is already very, very tight,” said Stamatis Tsantanis, president and chief executive of Seanergy Maritime Holdings. “The minute you have 10 or 20 ships stuck in different locations the market shoots up a lot.”
Despite an estimated 3.9% increase in dry bulk tonne mileage growth next year, the group agreed there will be a dramatic effect on rates.
“In 2019, 300 to 400 capes will stop to install scrubbers within a year,” Mr Tsantanis said at the 10th Annual Capital Link New York Maritime Forum. “You can understand what is going to happen with the rates. That by itself is going to create a huge supply issue.”
Scrubber installations are not the only drag affecting vessel supply.
Even those ships that do not stop to install scrubbers will need to take their vessels out of service at some point for the better part of a week to clean their bunker tanks ahead of the switch to low-sulphur fuel and upgrade equipment for the use of new fuel, said Hamish Norton, president of Star Bulk Carriers.
There are also several interventions that need to take place to install ballast water treatment equipment, said Loukas Barmparis, president of Safe Bulkers.
Mr Barmparis expects the low-sulphur cap to continue impacting supply in 2020 as cost-conscious charterers ask owners to slow steam their ships.
“The charterers will not like to take excessive costs,” he said. “They will ask the owners to go slower, around 24-25 knots. That will be another important factor that affects supply.”
The economics of complying with the sulphur cap regulations will also lead to increased instances of scrapping, said John Wobensmith, president and chief executive of Genco Shipping & Trading.
“From a financial standpoint, I do not know how a 20-year-old cape competes in an $800 a tonne fuel environment,” he said. The panel did not voice an opinion on the increased fuel price estimate.