BRi USA NEWS - Containership Owners Continue Scrubber Retrofits Despite Oil Crash, Decimating IMO 2020 Savings


Dear all Valued Customers


The implementation of the IMO 2020 marine-fuel regulation has gone completely off script. Scrubbers worked like a charm earlier in the first quarter because Very Low Sulphur Fuel Oil (VLSFO) was much more expensive than Heavy Fuel Oil (HFO). Now marine-fuel pricing has crashed to historic, even negative value lows at one point, in recent weeks.


Not only are savings from scrubbers being squeezed or eliminated, one of the rationales for installing scrubbers in the first place — to protect against a higher fuel bill — has been undercut. Ship owners are now paying less for IMO 2020-compliant VLSFO than they did for more polluting HFO one year ago. This unprecedented decline has made the predicted savings from exhaust-gas scrubbers essentially evaporated. Yet, containership owners are moving forward with scrubber retrofit programs.


Bunker prices are also expected to take a hit in the coming weeks, as reduced demand from containerships will affect the market in May. In that month alone, more than 200 sailings are expected to cancelled or withdrawn. Despite a reduction in the low sulphur fuel price spread to just $50-70 per ton, containership owners have made the decision to proceed with their scrubber retrofitting programs. At least 20 vessels have entered shipyards for retrofitting in April, joining some 35 units already in process in March.


Shipyards in China that were locked down due to COVID-19 lockdown in February have resumed normal operations, allowing a total of 76 containerships to complete their scrubber installation. Scrubber retrofits are expected to continue in the coming months, with fabrication already in the works well in advance for units that were ordered several months ago, before the fuel price dropped to historic lows. Given the current fuel prices, containership owns may have months, even years, ahead before they realize any scrubber savings.


HMM Launches World's Biggest Box Ship, Just in Time for South Korea to Aid Maritime Industry


The South Korean shipping line, Hyundai Merchant Marine (HMM) this week launched the world’s largest containership, the “HMM Algeciras.”


The HMM Algeciras is the first of twelve 24,000 TEU class vessels scheduled to be sequentially delivered by second quarter 2021. These twenty new eco-friendly mega ships equipped were sourced with the environment and the IMO 2020 regulations in mind, as each come equipped with a scrubber system, optimized hull design and highly efficient engines. These ships are expected to improve HMM’s energy efficiency and reduce carbon emissions.


The vessel is set to be phased into The Alliance’s FE4 Asia-North Europe service, currently operated by 12 14,500 teu Hapag-Lloyd vessels. However, its first sailing could also be its last, at least for a while, as the demand slump in North Europe for containerized goods, due to the outbreak of the coronavirus pandemic, has led The Alliance partners to merge the FE4 and FE2 strings.


The launching of the new mega ship comes just in time for South Korea’s government to outline an enormous financial package to aid its maritime industries. According to a report in The South Korea Herald, the Ministry for Oceans and Fisheries has set aside $1 billion USD to help shipping lines, shipyards and other maritime players. South Korea Minister Moon Seong-hyeok said: “The shipping firms are expected to suffer more serious damage after the second quarter with the global economic turmoil.”


As a point of reference, in 1957 the first fully containerized ship – The SeaLand Gateway City - had a capacity of 228 x 35’ containers.


USTR Announces More Section 301 Exclusions for Bags, Hardware, Electronic Items


The United States Trade Representative (USTR) has announced additional exclusions from the additional 25 percent tariffs on the Section 301 list 3 goods from China. Included in the exclusions are engine parts, bicycles, some electronic items, bags and hardware. See the full list here in the USTR announcement.  


These exclusions, which must be claimed using new HTSUS subheading 9903.88.45, will be retroactive to Sept. 24, 2018, and remain in place until Aug. 7, 2020. Importers may apply for refunds of any tariffs paid on these goods since Sept. 24, 2018.


If you have any questions regarding the exclusion process or need assistance filing for refunds on additional tariffs please respond to this email


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As a valued customer, we hope that you will continue to trust us to source the best options for your supply chain needs now and into the future. Feel free to contact your assigned Customer Solutions Representative, should you have any further queries or questions regarding our BRi USA News.

Keeping you updated,

BRi Customer Solutions Team 

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