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IMO2020 to cost OOCL at least half a billion dollars

15 Oct 2018

Hong Kong-listed shipping firm Orient Overseas Container Line (OOCL) expects to increase its bunker surcharge from the second half (2H) of 2019 due to the IMO 2020 regulation, which requires all ships to burn marine fuel with a sulphur content of not more than 0.5% from 2020 onwards.

“Currently, the industry has been grappling with the challenges associated to fleet adjustment options, including uncertainties in the availability and accessibility of the 0.5% Low Sulphur Fuel (LSF) in the market and the premium that will be charged for the cleaner fuel,” it says.

“As we explore our options and what would be best for our fleet to ensure compliance by the deadline, OOCL will begin our transition into the use of LSF for our entire fleet during the second half of 2019.  

“By looking into the expected bunker consumption of our fleet and the projected price difference from switching to the compliant fuel which may possibly become increasingly expensive due to tight supply in the market, we expect the additional cost impact to easily fall well above half a billion dollars. 

“Under the current industry environment and the level of cost involved to an industry that is already very cost-sensitive for survival, shippers and the consumers will need to prepare to shoulder this burden.”

Moving forward, OOCL says it will be introducing a bunker recovery approach based on a floating bunker formula to better reflect the changes in the industry environment. 

The approach will take various factors into account, including the different fuel types being used, fuel price fluctuations, ship size and capacity, and vessel utilisation levels.

“In sum, we believe that we are taking the right step towards a greener and more transparent direction forward in the industry as we all embrace the IMO 2020 Regulation together,” it notes.

“As a responsible and committed member of the international community, OOCL will continue to work closely with our customers and business partners to strive for further improvements in all aspects of our businesses for a greener future in the generations to come.”

Photo credit: OOCL
Published: 15 October, 2018


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