Coronavirus disrupts Hapag-Lloyd's bunkering plans

Conversion of 15,000 teu Sajir to run on LNG has been delayed until late August while the carrier is seeking leeway in meeting the obligations of its bunker supply contracts.

News ID: 80506

Date: 02 June 2020 - 10:47

Moves come as coronavirus outbreak has disrupted the global supply chain and world trade, forcing container shipping lines to cancel sailings and run their fleets at reduced capacity.

Hapag-Lloyd is trying to reduce costs to weather the current depressed market.

THE coronavirus pandemic is forcing Hamburg-based Hapag-Lloyd  to review bunkering plans, both for its first LNG-fueled ship and other vessels running on conventional fuels.

Hapag-Lloyd had previously aimed to kick off the retrofitting of the 15,000 teu Sajir with a liquefied natural gas dual fuel engine in May but that has been held back by a shut-in of yard operations that was triggered by the coronavirus outbreak in China.

Sources told Lloyd's List that following a discussion between the shipping line and the commissioned yard, the conversion work on the container ship may only begin in late August or early September, at least three months after the original target date.

The retrofit of the vessel is now expected to be completed by the end of this year, they said.

The 2014-built Sajir has been actively trading as of last month and is due to arrive at Kaohsiung on June 6, data from Lloyd’s List Intelligence showed.

Hapag-Lloyd could not be reached for comments as at press time.

A senior executive with the world's fifth largest container shipping firm has separately signaled at a recent webinar the intent to negotiate for some leeway from its bunker suppliers, which include supermajors such as Shell and ExxonMobil.

Senior director for purchasing and supply, Jan Christensen has said that the shipping line seeks to reduce costs and bolster liquidity by among others, securing extended payment terms from its bunker suppliers.

Sources active in the marine fuel industry also noted that Hapag-Lloyd – as with many container shipping lines – has had difficulty meeting the contracted purchase commitments of their bunker supply contracts.

Lloyd’s List understands that Hapag-Lloyd has term contracts fixed with suppliers, calling for its vessels to take on certain bunker volumes within specified time frames.

These contracts were not unusual given shipping lines, particularly those active in the container trade, had sought to secure compliant bunkers before a 0.5% global sulphur limit on marine fuel kicked in at the start of this year.

But the coronavirus outbreak has disrupted the global supply chain and world trade, forcing container shipping lines to cancel sailings and run their fleet at below optimal capacity, thus consuming less fuel than planned for.