Marine Link
Thursday, December 13, 2018

OOCL Begins Transition to Meet IMO 2020 Regulation

Maritime Activity Reports, Inc.

October 12, 2018

Pic: Orient Overseas Container Line

Pic: Orient Overseas Container Line

Hong Kong-based container shipping and logistics service company Orient Overseas Container Line (OOCL) fleet moves forward to meet IMO 2020 regulation.

Over the years, the industry has seen an increasing amount of attention given to the environmental impact from the global supply chain, resulting in regulations on emissions control and environmental protection becoming more stringent and widespread across the world.

May it be in the form of introducing or expanding Emissions Control Areas (ECA) on the regional level, meeting slow steaming requirements during sensitive seasons to avoid whale strikes at the local level, or investing in more efficient ships with the latest environment friendly features to meet emissions reduction targets, we have all been doing our part to contribute to the protection of our environment.

"OOCL has consistently outperformed many international requirements and industry standards by proactively taking on a leadership role in implementing many important initiatives to address global environmental challenges," said a press release from the company.

"They include green investment on our assets, development of green IT solutions, better Greenhouse Gas management, and participation in global environmental initiatives, contributing to the success and development of our environmental sustainability profile," it added.

Moving forward, the industry will be stepping into an important chapter in its history by ensuring all ocean-going vessels in our fleets will be able to meet the International Maritime Organization’s (IMO) new Sulphur cap regulation by January 2020.  

With this new Sulphur cap on marine fuel lowering from 3.5% to 0.5%, approximately 85% of Sulphur emissions is expected to be reduced but at a significant cost to the entire industry, estimated at about US$60 billion each year.

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.  

"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," it said.

"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" the press release added.

In preparation for the surge in this operating cost and in consideration of the continual trend of rising fuel prices in the market, OOCL will be introducing a bunker recovery approach based on a floating bunker formula that will better reflect the changes in the industry environment.  

This approach will take various factors into account, including the different fuel types being used, fuel price fluctuations, ship size and capacity, and vessel utilization 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.  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," the company concluded.

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