COSCO chairman calls for increase in low-sulphur fuel supply
The following article entitled ‘COSCO chairman calls for increase in low-sulphur fuel supply’, which BIMCO has shared with Singapore bunker publication Manifold Times, first appeared in the June edition of the BIMCO Bulletin here.
Captain Xu Lirong, Chairman of China COSCO Shipping Corporation Limited (COSCO), one of the world’s biggest container shipping companies, seeks clarity about the availability of low-sulphur fuel as the 1 January deadline for the new sulphur regulation approaches. Here, Captain Xu – who recently received the President’s Award at BIMCO’s Conference in Shanghai – answers questions on the 2020 sulphur regulation and the China-US trade war:
What are your biggest outstanding concerns and challenges when it comes to the 2020 sulphur regulation, and how will you solve them?
Currently, we plan to purchase low-sulphur fuel oil and carry out selective desulphurising tower renovation measures to actively respond to the requirements of the 2020 IMO.
However, no matter what measures are taken, a surge in costs will be inevitable and they cannot be borne solely by shipping companies, which is one of our current concerns.
We will take a variety of measures to reduce fuel consumption, strengthen communication with customers, and take the initiative to inform them of the relevant background information and the reason for the increase in fuel costs, in an effort to cope with the changes together.
Are you concerned about the availability and quality of low-sulphur fuel?
We are urging the industry to increase the supply of low-sulphur fuel oil as soon as possible to ensure that market demand can be met at the earliest possible date. At present, there is still considerable uncertainty about fuel oil with a 0.50% sulphur content.
However, international consultants and big oil companies normally deem that, in the early 2020s, only a third of the low-sulphur fuel oil demand will be met by fuel oil with a 0.50% sulphur content, with the remaining two-thirds being met through the use of more expensive light oil with a 0.10% sulphur content.
This light oil is expected to be about $100 to $150 a tonne higher than the average price of high-sulphur fuel oil currently being used. The company will actively ensure the supply and cost-control of low-sulphur fuel oil, track the development trend of global supply and strengthen communication with fuel oil suppliers.
What are your main concerns in relation to the trade war?
China-US relations have always been characterised by cooperation and frictions, and bilateral trade is not immune. Last year, bilateral trade volumes of China and the US exceeded $630 billion, while two-way investment exceeded $240 billion, and people-to-people exchanges exceeded five million. Almost all large companies in the US have set up business in China and all US states have entered into cooperation with the country.
Any changes in the area of trade will directly affect shipping. We are continuing our customer-centric operations, adhering to our original intention of service-orientation, and are committed to the concept of win-win cooperation.
We are devoted to promoting open, fair and sustainable global trade and providing quality services to customers around the world. In the future, we will actively develop the market between China and the US, and tap into the supply of goods. At the same time, we will adjust our transportation capacity, optimise the shipping routes, the supply of goods and market structure, and enhance our ability to reduce and defuse trade friction risks by strengthening cost management and improving service level.
Photo credit: COSCO Shipping Lines
Published: 11 July, 2019
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