New year, new sulphur cap.

The Sulphur cap is here. If you’re a shipowner still running on High Sulphur Fuel Oil (HSFO) you need to trust to your Fuel Oil Non-Availability Report (FONAR), unless you are fitted with scrubbers. If you’re running on Low Sulphur Fuel Oil (LSFO) now you still need to get any HSFO off your vessel by 1 March 2020 due to the Carriage Ban. Apart from increasing the cost of running a vessel, the IMO’s two regulation are likely to see various additional costs being incurred by shipowners: costs of disposal of remaining onboard HSFO including costs of tank and line cleaning to avoid residual HSFO mingling with LSFO and pushing the Sulphur level over 0.5%; time lost in performing such operations; effect of LSFO on owners’ performance warranties under time charters; fines and detention due to inability to get remaining HSFO off the vessel by 1.3.2020 (there is no equivalent of a FONAR to cover this eventuality). A report from S&P Global Platts last week reveals that a lot of debunkering is going to have take place between now and 1.3.2020. https://www.spglobal.com/platts/en/market-insights/latest-news/shipping/122719-shipowners-rush-to-de-bunker-hsfo-as-imo-2020-looms

Added to that there is the greater risk of engine damage due to use of LSFO. Today Reuters carries a report that testing companies examining newer, low-sulphur marine blends acquired in Antwerp, Belgium, Houston and Singapore have found sediment at levels that could damage the engines of ocean-going vessels. Depressing news with which to welcome in the new year. https://uk.reuters.com/article/uk-shipping-imo-fueloil/tests-raise-alarms-over-fuel-blends-coming-for-ocean-going-vessels-idUKKBN1YZ1ED

It is likely that the new decade will see a spate of claims arising out of the sulphur cap and the carriage ban, particularly under time charters, with renewed interest by owners in the indemnity as a means of clawing back costs from time charterers.