March 12, 2021
Fuel prices are on the rise. As the cost of crude oil has slowly ticked upward, the price gap between HSFO and VLSFO has also widened. For shipping executives trying desperately to recover millions lost in scrubber investments, the reprieve may be long-awaited but for the rest of us, it comes as terrible news. Even with scrubber profitability up 46% since the end of 2020, the savings will never justify the risk.
That risk includes what seems to be a never-ending list of issues that have surfaced over the last year. There were numerous studies published that indicated that scrubber washwater poses a danger not just to the environment but to human health as well. Concern grew that scrubber discharge would make its way into the food chain. A bombshell report by the International Council on Clean Transportation showed that scrubbers are not equivalently effective as low sulfur fuels when their full pollution implications are taken into consideration. Questions about the IMO’s current scrubber regulations came to light. Remember, that guidance was developed when there were only three ships equipped with scrubbers. Limits were designed to fall within the capabilities of scrubbers at the time without any regard to their safety. Amidst the uncertainty, ports across the world began to ban their use. And who can forget when scrubbers found themself in the crosshairs of their biggest supporters? Ship owners that had once spoken so highly of exhaust cleaning technology, complained of lengthy installations and costly repairs. In many cases, repairs were needed just months after initial installations due to corroded discharge lines.
Despite the mishaps, not all ship owners have been scared away. The widening fuel spread is just too tempting for some. Eagle Bulk Shipping boasted about scrubber profitability at an earnings call just earlier this month. Eighty-seven percent of Eagle Bulk’s fleet is equipped with scrubbers. Star Bulk Carriers made similar claims in their earnings call, attributing scrubbers to recent savings. They feel confident that they will see further cost savings from scrubbers in the future. That confidence just isn’t warranted.
The scrubber industry may be hell-bent on clawing its way back from the grave but ship owners hoping to cash in are going to be sorely disappointed. Scrubbers are a costly mistake no matter the price of fuel. The time has come to leave scrubbers in the past and focus on a future in zero-emission fuels.
Scrubber Bunker Price Spreads Widen Further – Ship & Bunker by Ship & Bunker News Team
Eagle Bulk Shipping Inc. Looking to Profit From Scrubber-Fitted Fleet As Margins Rise | Hellenic Shipping News Worldwide
Star Bulk Carriers Corp. (SBLK) CEO Petros Pappas on Q4 2020 Results – Earnings Call Transcript | Seeking Alpha