Marine Hull & Machinery and War Risks Market Update - FEBRUARY 2019 IMO 2020 Special Edition
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Marine Hull & Machinery and
War Risks Market Update
FEBRUARY 2019
IMO 2020 Special Edition
1
A BOU T G AL LAG HE R
CONTENTS
Founded by Arthur Gallagher in Chicago in 1927, Gallagher
(NYSE: AJG) has grown to become one of the largest
insurance brokerage, risk management, and human capital
consultant companies in the world. With significant
reach internationally, the group employs over 30,000
people and its global network provides services in more
than 150 countries.
Gallagher’s London divisions offer specialist insurance
and risk management services. We provide bespoke
policy wordings, programme design and risk placement
solutions, and consulting support across a range of
specialisms. We manage complex, large, global risks on 01 . 02 . 03.
a direct and wholesale basis and serve as primary access INTRODUCTION M A R K E T U P D AT E C A S U A LT Y R E P O R T S
point to Lloyd’s of London, London company markets, and
international insurance markets.
W E H E L P B U S I N E SS E S G O B E YO N D T H E I R G OA L S .
I T ’ S T H E G A L L A G H E R W A Y.
2 4 6
04. 0 5.
AXA XL: I N T E R N AT I O N A L R E G I S T R I E S I N C . : “ M a r p o l A n n e x V i
‘IMO 2020: Systemic Risk - 0.50% Global Fuel Oil Sulphur Limit - Update and
in The Hull Account?’ Regulatory Perspective”
8 12
06. 07. 08.
L LOY D ’ S R E G I S T E R ( L R ) : NORWEGIAN HULL WA R A N D P I R A C Y N E W S
‘Sulphur 2020’ CLUB: ‘Scrubbers - An
Underwriter ’s Perspective’
18 24 26
2
01. INTRODUCTION
Welcome to the February 2019 edition of the Gallagher
Marine Hull & Machinery and War Risks Market Report.
In this special first edition of 2019, we are taking the opportunity to look ahead and address
the new IMO MARPOL sulphur regulations due to take effect in 2020. The legislation without
doubt presents some of the biggest challenges to face the shipping sector in modern times.
Shipowners must carefully consider the commercial implications of the various options
available to them and, most importantly, manage the associated risks.
We have asked a number of our friends and partners to contribute to this extended report.
This includes a Q&A with Tim Wilson of Lloyd’s Register who offers valuable insight on
compliance options to successfully meet the 2020 deadline. A flag state perspective
is also provided in a regulatory update by Nick Makar of International Registries. Risk
management commentary from the insurance world is offered by Ole Wikborg of
Norwegian Hull Club and Mike MacColl of Axa XL.
The new regulations are looming against the backdrop of an undoubtedly
more challenging insurance environment. Ahead of the next Hull & Machinery renewals,
Underwriters will certainly be asking owners and managers about their plans to comply
with the regulations and their procedures to manage the risks.
4 5
difficult questions around causation and • Aspen Syndicate 4711 has ceased The above follows on from the complete
who is liable for damage. This will be writing marine hull along with a marine withdrawal of WR Berkley
brought even more into focus as vessels withdrawal from two other lines of Syndicate 1967 in 2017, and also the scaling
switch to low sulphur fuels to comply with business (aviation and professional back of marine hull business (blue water)
the 2020 regulations. This topic is explored indemnity). Aspen has since sold the by Canopius Syndicate 4444.
in more detail by Mike MacColl of Axa XL in renewal rights to Helvetia who have
his article later in this report. opened a new office in London. The The tougher stance towards hull &
Helvetia team will be Ralph Godwin and machinery risks is not limited to Lloyd’s.
London Market Simon Wells (both ex Aspen) and Iain
McLeod (ex Channel Syndicate).
Other London market participants have
indicated intent to scale back on their
participation and withdraw from risks
Following on from a string of poor marine • Barbican Syndicate 1955 have
with poor historical performance or where
underwriting results over many years, withdrawn from marine hull and
technical rating is considered inadequate.
Lloyd’s of London has demanded that cargo business.
participating syndicates demonstrate
• There is no intention to replace senior RSA have recently announced they will exit
clear plans to return to profitability. This
marine hull Underwriters who left Tokio London Market Marine Logistics, Marine
overall poor performance on a number of
Marine Kiln Syndicate 510. Des Keane Trades, and Ports and Terminals as well as
lines of business was further exacerbated
and Konstantinos Tampakakis departed International Construction, International
in 2017 by the major catastrophe losses
earlier in the year. Freight and our Delegated Authority to
which hit the market. Marine hull insurance
• CNA Hardy Syndicate 382 have closed Lodestar (for Fixed Price Protection and
is a repeat offender in terms of results
their marine hull book along with Indemnity Insurance). They will continue to
and a number of Lloyd’s syndicates have
other non-profitable lines of business offer Marine Hull and Hull Construction. As
announced modifications and withdrawals
citing that these lines have struggled is the case for much of the London market,
of their offering in this area.
to deliver profitability even in light of they will be looking to secure meaningful
0 2 . M A R K E T U P D AT E • Advent Syndicate 780 has announced improving market conditions. premium increases across this portfolio in
order to return to profitability.
a complete shutdown of their marine • Standard Syndicate 1884 will enter
insurance book. This comes amidst run off from 1st January 2019.
It is widely believed that there could be
Natural disasters and extreme weather continued to hit the headlines in 2018 as once again, discussions that Advent will be merged Standard Club concluded that ‘current
further casualties in a marketplace which
with Brit which is also owned by parent overcapacity and a weak pricing
the trend of increased natural catastrophes continued. has been characterised by over-capacity in
group Fairfax Financial Holdings. It environment have made Lloyd’s a
recent years. There has already been some
seems likely that Advent’s overall challenging environment for it to
Hurricanes Harvey, Irma and Maria (HIM) being constructed at Eastern Shipyard in more than any other that has galvanised hardening of rates and this is expected
portfolio will be part run-off, part develop a profitable underwriting
in 2017 were among the biggest marine Florida (close to completion) was very hull underwriters, their management and to continue in 2019. How significant will
transferred to Brit. business with sufficient scale.
loss events of the past five years and badly damaged. Estimates are difficult at Lloyd’s of London to look for higher prices largely depend on whether capacity enters
would feature highly among the top 10 this stage but a total loss would be over and to trim back the book. With larger • Brit Syndicate themselves have • Channel Syndicate 2015 have withdrawn the market in other parts of the world in
marine losses of the past decade. The USD 70m. Typhoon Mangkhut caused and more sophisticated vessels entering withdrawn from yacht business from marine H&M business. They will an attempt to take advantage of a more
three storms in 2017 caused an estimated damage to coastal infrastructure, shipping the sector – and more risky trading areas where they were considered a continue to write some of the book via favourable rating environment.
$1bn of insured losses for the yacht market containers and yachts in Hong Kong and such as polar waters being explored – the substantial player. their parent company Scor.
alone, as well as causing extensive damage China, while an offshore engineering vessel risk of ever larger single losses occurring • AM Trust Syndicate 1861 have closed • Liberty have announced they will
to ports, cargo and inland marine risks Hai Yang Shi You ran aground near Hainan. is growing. A loss of an ultra-large or their Lloyd’s marine book in its no longer write marine hull business
such as warehouses, buildings under Typhoon Jebi, the most powerful storm to very large vessel now has the potential to entirety, withdrawing from hull, through their Lloyd’s Syndicate 4472
construction and weather stations. Natural hit Japan in 25 years, caused tanker Houn generate claims in the $1bn to $2bn space. liability and cargo. AM Trust were a but will instead renew and grow their
catastrophes continued to generate losses Maru to break its mooring and collide new participant in the marine market in portfolio via their company security.
for marine insurers in 2018. Hurricane with a bridge linking Kansai International Attritional losses were stable but proving 2015, headed by ex Swiss Re hull
Florence and Michael caused damage and Airport to the mainland. to be material against the backdrop of a Underwriter Peter Townsend.
disruption to several ports on the US east reduction in marine insurance premium
coast in September. Florence is estimated The shipyard fire at Lurssen in Germany rates in recent years. Machinery breakdown
at USD 2.5bn, Michael is estimated at on 14 September may turn out to be the (including engine failure) claims continued
USD 6-10bn. Losses to the marine market largest pure hull loss ever. In the event to be among the largest causes of loss
from these events are modest, however, it is declared a total loss the claim will by value and frequency. Claims arising
a factory fishing vessel ‘North Star’ be in excess of EUR620m. It is this loss from contaminated fuel continue to raise
6 7
0 3 . C A S U A LT Y R E P O R T S
Aeneas / Panamax Alexander / Sakizaya Hyundai Merchant Marine containership: failure and required a tow, headed to an Fjordvik Lürssen shipyard fire
Kalon / Osios David / Nyk Orpheus the Panamax Alexander, Sakizaya Kalon anchorage in the Great Bitter Lake. Whilst According to Lürssen, all personnel aboard
On 3 November 2018 the 1975 built At 02:00 hours on Friday 14th September
and Osios David were then in collision as the Panamax Alexander was en route to cement carrier Fjordvik ran aground on a 2018, a fire broke out in a 400-foot the vessel were evacuated and examined
On 15 July 2018 chaos erupted in the
they tried to stop and avoid the grounded the anchorage she was in collision with the breakwater whilst approaching the port floating drydock at the Lürssen Shipyard for smoke inhalation injury. The rest of
Suez canal when a number of vessels in
Aeneas and each other. The Panamax fully cellular containership NYK Orpheus of Helguvik in Iceland and subsequently in Bremen, Germany as Maritime Executive the yard was also evacuated, and more
the southbound convoy were in collision
Alexander was also reported to have which was in a northbound convoy. suffered a hull breach. As Roose Law reported. The blaze also affected a yacht than 110 firefighters and 30-40 firefighting
according to Roose law. The accident is
grounded. Tugs were deployed to the The NYK operated vessel completed reported the Bahamas flagged Fjordvik within the dock. vehicles responded to the scene. A team
reported to have resulted from an initial
accident site and the Aeneas was pulled inspections in Port Said and has since was proceeding into the port of Helguvik, from the Jos. L. Meyer shipyard also
mechanical issue which occurred on board
free and taken into the port of Suez. The proceeded. The casualties led to serious which sits on Iceland’s South West coast, provided support.
the 5,100 TEU containership Aeneas,
Osios David also proceeded into Suez delays for dozens of vessels in both the when she struck the breakwater at 00.50
causing the vessel to run aground. Three
under escort or tow whilst the Panamax northbound and southbound convoys with hours coming to rest broadside to the
bulk carriers which were following the
Alexander and the Sakizaya Kazon, which the southbound section being closed to structure on her port side. The weather at
was thought to have suffered rudder traffic for several hours. The Suez Canal the time was stormy and may have been
Authority, whose tugs were involved in a factor in the accident. The vessel was
assisting all the affected vessels, were under control of a local pilot at the time of
reported to have arrested the four vessels the grounding and had 14 crew members
involved in the original incident seeking on board. She was also loaded with 104
compensation for tug assistance and m/t of marine gas oil on board.
damage to the canal. The claims are likely
to be significant. The Icelandic Coast Guard received an
emergency call from the vessel notifying
them of the grounding and shortly
afterwards two rescue helicopters were
dispatched to the site together with rescue
teams and a local lifeboat from Suðurnes
and Hafnarfjörður. As the vessel was being
pounded by the surf and continuously
pushed against the breakwater, the Coast
Guard ordered an emergency evacuation.
8 9
Aulac Fortune Eastern Shipyard
The 2010 built tanker (dwt 17,542) caught In October 2018, Hurricane Michael hit “Both shipyards have taken hurricane
fire in Hong Kong waters off Lamma Island Panama City, Florida-based Eastern damage,” ESG president Joey D’Isernia
on 8th January 2019. One person has died Shipbuilding Group’s Allanton shipyard said. Hurricane surge swept a nearly
and two others are missing. As gcaptain. with category 4 hurricane-force winds. finished 261ft Alaska factory trawler, the
com reported, the fire on board the Insurance Marine News reported that this North Star, into Saint Andrews Bay where
Yantian Express Fire
Vietnamese-flagged vessel was believed to has caused up to $75m worth of damage, it was resting on its starboard side. The
have started as crews were preparing for with several UK-based insurers said to be trawler was built by ESG for Seattle- A fire broke out in one container on the
bunkering operations from a fuel oil barge. exposed to marine construction losses. based Glacier Fish Co and was launched deck of the German-flagged containership
Authorities said the fire started at around in April 2018. The vessel was scheduled Yantian Express on Thursday 3rd January
11:30a.m. local time when the vessel was Allanton Yard is located about 15 miles east to be completed and depart for Alaska in 2019, and spread to additional containers, According to Maritime executive two more
rocked by three explosions. Seven crew of Eastern’s headquarters and main yard November. Hapag-Lloyd, the owner of the vessel ocean-going tugs have been dispatched
members also suffered injuries, including in Panama City, and just a few miles west informed World Maritime News. to meet the containership Yantian Express
one who was reported in a serious of Mexico Beach, Florida, where Hurricane “The boat was nearing completion, and at a position about 900 nm southeast of company Smit. Five crewmembers have
condition, according to the South China Michael hit land. because of all the destruction down there, “The crew of 8 officers and 15 seafarers is Halifax. The Express has been drifting or returned to the Express to assist the
Morning Post. One of the injured was a we have not been able to survey the unharmed. Efforts to extinguish the fire in moving ahead at a slow bell in the North operation. According to the same report
crew member of the oil barge. The blaze vessel,” Jim Johnson, president of Glacier the containers were launched immediately Atlantic since January 3 2019, when a the Mobiliser had the Yantian Express in
was extinguished at around 4:30p.m. The Fish, told the Seattle Times. Other projects but have had to be suspended for the time cargo fire forced her crew to evacuate. tow and was moving ahead at a “slow
tanker had a total of 25 crew members on at Eastern include the new Ollis-class being due to a significant deterioration speed,” but Hapag-Lloyd did not yet have
board. The vessel had just offloaded an oil vessels for New York’s Staten Island Ferry, of weather conditions,” the German liner The new additions to the salvage team are an estimate for the time of her arrival at
cargo in Dongguan, Guangdong province and Tier 4 tugs for McAllister Towing and company said. the DonJon-owned Atlantic Enterprise and a port of refuge. The full extent of the
and had stopped to load fuel before it was Transportation Co. the Boskalis AHTS Sovereign, according damage from the fire is currently unknown.
scheduled to depart for Thailand when the The 7,510 TEU vessel, was deployed in to the U.S. Coast Guard. The AHTS vessels
incident occurred. the company’s East Coast Loop 5 (EC5) Smit Nicobar and Maersk Mobiliser are
service, and was on its way from Colombo already present and assisting. As reported
to Halifax via the Suez Canal when the in the article, dated January 14th 2019,
incident occurred. On January 7th 2019 operator Hapag-Lloyd says that the fire
the 2002-built ship was approximately was largely under control, thanks to a
800 nautical miles off the coast of Canada, response effort headed up by salvage
Nova Scotia.
10 11
Star Centurion- Antea collision
Twenty-two crew members have been released footage on media outlets of the Based on the available information, there
evacuated from Vanuatu-flagged MV Star incident, the tanker, owned by Indonesian are no signs of an oil spill at the site.
Centurion following a collision between Pertamina, punctured a huge gash in the (World Maritime News Staff).
the cable layer and a Hong Kong-flagged side of the cable layer, formerly known as
tanker MT Antea on Sunday 13th January Lewek Centurion, causing it to list heavily.
Durban Queen Í
2019 according to World Maritime News.
Sincerity Ace assistance from another vessel the owner
The pipelaying vessel, managed by Vallianz As reported by the Maritime Executive the
chartered. Unfortunately they could not
World Maritime News reported that the The collision took place 35 nautical miles Offshore Marine Pte. (VOM) and owned by 1983 built asphalt tanker suffered a loss
locate the missing crew, Shoei Kisen Kaisha
fire-stricken car carrier Sincerity Ace east of Changi, Singapore at 06:20 a.m., Trevakis Ltd, has been at anchor at outer of stability and capsized east of Qatar on
said. Vessels transiting the area have
was taken under tow on January 8 2019, local time, resulting in the capsizing of port limits of Singapore since January 8, 20 November 2018. She was on a voyage
been asked to keep a sharp lookout for
the vessel’s owner Shoei Kisen Kaisha Star Centurion. The tanker, which has 2019, Vallianz Holdings said in a statement from Hamad to Doha. All crew were safely
the bodies of the missing crew and report
confirmed. The company added that also sustained damages to its hull, the to WMN. rescued by the French frigate Cassard.
any sightings to local authorities. “Our
the 650-foot unit is being towed by the Jakarta Post reported. Based on the
thoughts and prayers are with the crew
salvage tug Koyo Maru heading to a
and their loved ones during this difficult
yet-to-be-determined location in the Far
time. Our company is working closely
East. Sincerity Ace suffered a significant
with our crewing department to ensure
vessel fire in the middle of the Pacific on
everyone is being properly cared for,
December 31 2018. At the time, there were
especially the families of the missing crew,”
21 seafarers aboard the ship. The crew
the company added.
battled the fire in an attempt to extinguish
it but were not successful and were forced
to abandon the vessel.
The US Coast Guard and Navy coordinated
rescue efforts of the crew with other
merchant ships in the area. Due to difficult
search conditions and rough weather,
16 crew members were rescued. When
the tug arrived on scene the crew was
instructed to exert all efforts to try and
locate and recover the bodies of the
remaining 5 crew members together with
12 13
IMO 2020 Special Edition
04. AXA XL:
We might expect to see claims arising in the following areas, all are inter-related:
IMO 2020: Systemic risk in the Hull account?
Hull & Machinery policies: Claims on Cargo insurers for: Charterers Liability insurers for:
• Damage to filters, purifiers General Average • Liability to Owners for damage to the
and engines • Maybe cargo damage as a vessel
consequence of a grounding
• Hull damage from groundings or • Unsafe port claims - supply of
or collision.
collisions as a consequence of loss of contaminated or fraudulently tested/
power/black outs sampled bunkers in a nominated port
Claims on P&I insurers for:
perhaps?
• Claims for Salvage assistance
• Non-payment of Cargo contribution in
There may be many more possibilities.
• General Average General Average
• Wreck removal claims following a CTL
Loss of Hire insurers for:
Mike MacColl after grounding, a collision perhaps or
• Loss of Charter Hire arising as a an explosion on board?
Global Head of Hull
XL Catlin consequence of any of the above
• FD&D claims, plenty of those?
AXA XL, a division of AXA
So, we’ve had a window on Galveston threw up an issue that most With Galveston (and subsequently other Whether fitting scrubbers or not, the expected to exercise the necessary level both unexpected and unintended. If the
Marine insurers (absent those with areas), we saw FAME become infamous
what might happen as we additional expense of preparing for 2020 of attention not only for their own benefit worst happens, well organized procedures
technical teams perhaps) were blissfully (to the wider world at least) and ISO 8217 is no doubt an unwelcome distraction (preservation of the assets) but for the followed to the letter will greatly assist
approach 2020 with regard ignorant of. Cat fines were the hot topic not a testing standard capable of spotting for shipowners in a relatively depressed safety of the crews they employ and for with a claim, in the first instance, on a
to the new fuel regulations, five or six years ago, with the Joint Hull it, although for charterers/fuel suppliers shipping market (albeit light at the end the preservation and safe delivery of the Hull & Machinery policy. The same applies
particularly where scrubbers Committee issuing guidelines in 2013 on aware of Clause 5 of ISO 8217, it does state of the tunnel in some sectors) but it is cargoes they carry. when insurers wish to subrogate against a
the subject. Many cat fine related claims that no material should be present in the
are not the chosen route one to be taken very seriously. Similarly, responsible third party.
have been encountered and paid for since, fuel at a concentration that is harmful to the prospect of an increase in frequency Problems will likely be encountered by
to compliance. “Chaos” but 2020 (see opposite page) brings personnel, jeopardizes the safety of the and severity of claims is a concern for a even the most diligent Owners. However, if
springs to mind and, whilst an enhanced threat, to safety at sea, to ship or adversely affects the performance long suffering marine insurance market. procedures and best practices are adhered
shipowners have a myriad shipowners and their charterers and to of the machinery”. From Galveston, Insurers need to be up to speed on the to by competent and well trained crew, the
insurers at the other end, and not just Hull many vessels suffered blocked filters,
of complex practical and technicalities and close enough to their risk of having such a problem should be
& Machinery insurers. Not new, maybe, purifiers & injectors, clogged pumps and, clients to understand best practice when minimal, a rare and fortuitous occurrence
financial decisions to make, in the world of blending fuels but new in the worst cases, blackouts and engine they see it.
Marine insurers might also in terms of its immediate threat and, in damage. At least one vessel ran aground;
want to reflect on what particular, it’s likely impact on shipping. some required tug assistance and some For those that seek to rely on insurers,
Might it propagate a rapid escalation in used expensive chemicals to dilute/clean it might be worth taking a step back
happened recently out of
the frequency of machinery related claims up the problem. Others lost time and and looking at why that might not
Galveston and then get a on Hull & Machinery, Loss of Hire, Legal some have banded together to take legal be as easy as it sounds. This is not an
crystal ball out and look Liability, Cargo and P&I/FD&D insurers action. It could get very messy….and what unknown or altogether unexpected
and, maybe, introduce systemic risk? Let’s about the discovery of tanks filled with
toward 2020, it is, potentially, challenge. Insurers will expect Owners
hope not. contaminated/incompatible fuel…who’s to be on top of all aspects of the new
not a pretty picture. going to pay for removal and cleaning of demands of fuel sampling, testing and
those when there’s no damage? on board management and to be able to
demonstrate that to a high standard. They
will owe a duty of care in the preparation
and execution of procedures to mitigate
loss and to ensure vessel crews are (re)
trained accordingly and well in advance.
Safety first, surely, so they will be
14 15
So what can • Ensure bunkers are segregated with no
comingling taking place during loading
well as passing the fuel through coolers
to increase viscosity. Make sure these
If contaminated bunkers are received
onboard, it is important that a proactive
What can When a claim occurs, make sure the
right surveyor is engaged…a surveyor
Owners do? • Do not consume new bunkers until the
capabilities are readily available to the approach is adopted to mitigate the effects Underwriters do? who understands the issues, can work in
crew on board. as far as is possible. harmony with the owners technical team
analysis report has been received.
With a heavy focus on protecting the Underwriters should be wise to the best and can stand up in court to give evidence
safe and efficient operation of the ship, Don’t just follow minimum standards; The fuel supply chain should be • If possible, bunkers should be practices employed by their clients, they if needed. Consider legal assistance at the
carry out a Risk Assessment, ship by ship, implement the best possible practices to understood and only reputable suppliers, chemically treated to bring them back should engage with them and understand outset to help gather/preserve evidence,
following the MEPC (Marine Environment ensure the prospect of damage or delay is operating to IBIA/MEPC best practice within specification, by the use of the technicalities involved, working closely in conjunction with the surveyor and other
Protection Committee) approved guidance absolutely minimized in all circumstances. guidelines as a minimum, should be additives stored for that eventuality or with owners to get a clear picture of experts.
on ship implementation planning. Covering A “blue chip” approach will stand owners engaged. If possible, there should be procured locally. the difficulties that could be faced from
inter alia vessel capability and fuel quality: in good stead at every partnership evidence of satisfactory representative refinery to the ship, with sampling, testing There is so much information circulating
• Owners will need to ensure that there
level within their business, from their testing at all stages of production. Crews and management of fuels on board from on the implications of 2020 in so many
is alternative fuel supply available
• Risk assessment and mitigation plan relationship with customers, banks, should be encouraged to raise the alarm tanks through to the engine(s). circles, nobody can really claim not to be
onboard to consume during the interim
(impact of new fuels) classification societies, regulators, law if the slightest doubt suggests fuel aware of the sort of problems that could
period whilst looking for the best
enforcement agencies, Port State Control contamination at levels that can’t easily Gathering information from Owners be encountered without the exercise of
• Fuel oil system modifications and tank option to remove/offload the affected
through to their Crews on board and with be managed on board or that might lead who employ the highest standards will diligent, well thought through and, most
cleaning bunkers ashore.
their Insurers….to name but a few. to damage. For example, the supply of assist with risk selection…understanding importantly, practiced procedures. Insurers
• Fuel oil capacity and segregation compliant fuels will be more of a concern • Consideration should be given to ensure best practice allows Underwriters to will be there to support those clients that
capability Discuss and agree the Fuel Changeover away from the major bunkering ports and, that adequate cleaning is undertaken differentiate good from not so good. don’t really need us to do what is right.
Plan with charterers so as to ensure despite avenues that exist for reporting the of any tanks or pipelines that held Today, “what are you doing in preparation Those owners that don’t switch on to
• Procurement of compliant fuel
the vessel will be supplied with suitably use of non-compliant fuels, vigilance will the contaminated bunkers prior to for 2020” is a fair question and the more the potential and do nothing can be less
• Fuel oil changeover plan (from compliant and tested fuel in advance of discharge to ensure that there is no
be necessary at every stage. technical the answer the better. certain of that support.
conventional residual fuels to 0.50% the changeover date. All fuel samples cross-contamination of future bunkers.
sulphur compliant fuel oil) should be carefully obtained, clearly Improve contractual terms, maintaining • Preserve all of the evidence as may Understanding how good an owner is
• Documentation and reporting labelled, dated and sent for analysis as rights of action against charterers/fuel at managing risks such as these, makes
be required.
a matter of routine. Ensure reporting suppliers wherever possible (make sure that the claims process so much easier when
• Contact the manufacturers of your • If a claim on your Hull & Machinery/
procedures are tight and crews are given if rights are waived, your insurers are happy something goes wrong. Their knowledge
engines and purifiers and request LOH Underwriters (or others) is even a
the support and the tools they need to to accept that in advance). Commercially, and procedures might also greatly assist
advice on what limitations exist remote possibility, put them on notice
confidently deal with the issues they face this could be sensitive but, in the event in a recovery action against a third party
concerning fuel quality for safe, normal as soon as possible and keep them
day to day. of a claim against a Hull & Machinery fuel supplier (charterer, bunker supplier
operation of their equipment informed. Give their surveyor access to
policy, Owners record will be better for a or refinery for example), thus helping to
• Check historical records of bunker Compatible lubricating oils (of the everything they need.
successful recovery by their insurers against protect against an inflated claims record
suppliers with fuel testing laboratories correct spec for the fuel envisaged) a third party. by claims that were not a consequence of
and identify any previous quality issues. should be stored on board. Stock levels their own actions.
should be reviewed and updated well in Put in place comprehensive training/
• Samples should be sent for laboratory
advance. Compliant fuels may require retraining programs to ensure crews are
analysis immediately upon completion
additional measures to address lubricity up to speed with fuel and lubricity issues
of bunkering operations
either through the use of additives as and the procedures to cover all likely
eventualities. Empower and support them,
with help from ashore, to make the right
decisions notwithstanding commercial
pressures to do otherwise.
AXA XL is the P&C and specialty risk division of AXA SA. AXA XL Insurance offers property, casualty, professional,
financial lines and specialty insurance solutions to mid-sized companies through to large multinationals globally
16 17
IMO 2020 Special Edition
0 5 . I N T E R N AT I O N A L R E G I S T R I E S I N C . :
‘ M A R P O L A N N E X V I - 0 . 5 0 % G l o b a l F u e l o i l S u l p h u r l i m i t -
Update and Regulatory Perspective’
Background (from 1.50% to 1.00%), and in 2012 globally
(from 4.50% to 3.50%). More aggressive
considered essential and the MEPC agreed
long-term reductions followed in 2015 for
The International Convention for the to retain 1 January 2020 as the effective
SOx ECAs (from 1.00% to 0.10%), and a
Prevention of Pollution from Ships date for implementing the 0.50% fuel
global reduction (from 3.50% to 0.50%) highest priority, and it was agreed that
(MARPOL) is the main international oil standard outside of ECAs. Resolution
was set to occur in 2020 pending the the scope of work should not change the
convention aimed at addressing the MEPC.280(70) was issued by the IMO to
results of an associated availability review. An Intersessional Working Group
various sources of ship-generated MEPC’s decision on the effective date
notify all stakeholders of this decision. Meeting was convened in July 2018 at
Accordingly, the upcoming reduction of of implementation of the 0.50% sulphur
pollution. Six technical annexes contain
the fuel oil sulphur content limit from IMO headquarters to advance the work
the regulations on prevention of pollution limit and should be kept general to allow
3.50% to 0.50% on board ships operating of PPR on this task, with a focus on ship
by oil, noxious liquid substances, harmful Consistent Implementation of Regulation for the accommodation of any emerging
Nick Makar implementation planning. Progress was
outside of designated SOx ECAs is not a 14.1.3 of MARPOL Annex VI implementation issues. The scope of
Regulatory Affairs Advisor substances carried by sea in packaged
new regulatory development, but the final made developing various sections of the
form, sewage, garbage, and air pollution In connection with the decision taken at work relates directly towards ensuring
step in a series of progressive reductions consistent implementation guidelines,
from ships. Annex VI is the most recently MEPC 70 to retain 1 January 2020 as the a level playing field. It covers a range of
agreed over a decade ago. although much remains to be finalized.
added annex to MARPOL, which was effective date for the global 0.50% fuel oil issues from shipboard actions required
In particular, a Fuel Oil Non-Availability
specifically developed to address air sulphur content standard (regulation 14.1.3 before transitioning to using new 0.50%
Although regulation 14 of MARPOL Report (FONAR) format and guidance
emissions from ships. It was adopted at a of MARPOL Annex VI), a consortium of fuel oils, and comprehensive guidance on
Annex VI required the fuel oil availability still requires refinement to reconcile
diplomatic conference in 1997 and reached Member States and industry associations enforcement and verification measures,
review to be completed by 2018, the all while also ensuring the safety and differing views regarding the degree of
sufficient ratification thresholds for entry presented a paper outlining issues
International Maritime Organization well-being of the ship and its crew when information to be provided. MARPOL
into force on 19 May 2005. Work began that can be expected to arise with the
(IMO) Marine Environment Protection undertaking efforts to comply with the currently does not provide a standard
on a revision that same year, leading to implementation of the 0.50% sulphur
Committee (MEPC) agreed that a final 0.50% fuel oil sulphur limit. format for this notification. Ultimately, it
a comprehensive set of amendments in limit, regardless of the effective date. The
decision on the date of implementation is up to Parties of MARPOL Annex VI to
2008 that took effect in 2010. The revision MEPC was invited to consider a process to
of the 0.50% sulphur limit should be Substantive work commenced on the determine the appropriate action to take
took into account an agreement to review examine how the limit may be effectively
taken at MEPC 70 in October 2016. The new output at the 5th session of the IMO in non-compliance situations with due
the nitrogen oxide (NOx) emission limits implemented to ensure a level playing
basis for the early decision was to allow Sub-Committee on Pollution Prevention regard to mitigating evidence provided
after its entry into force in 2005, the field. It was noted that without consistent
maritime administrations and industry and Response (PPR) in February 2018, in case of non-availability. Standardizing
general growing contribution of ship implementation to all ships, a level playing
sufficient time to prepare and plan for the where an action plan was agreed to the information to be reported in such
emissions to air quality in many regions, field could not be ensured for ships
implementation. The review, carried out develop a single set of “consistent instances will help ensure consistent
and marine diesel engine technology using fuel oil compliant with the 0.50%
for the IMO by CE Delft (an independent implementation guidelines” to support handling by authorities and will also
improvements. sulphur limit. This is due to the expected
research and consultancy organization), consistent implementation of the 0.50% be very helpful towards ensuring the
significant gap between the costs for
concluded that the refining sector has the global fuel oil sulphur limit. The guidance obligations of signatory countries to
Regulation 14 of MARPOL Annex VI operators complying with this regulation
capability to provide fuel oil with a sulphur is intended to specifically address provide safe and compliant fuel oils are
contains the requirements pertaining and of those not complying. The additional
content of 0.50% or less in 2020 to meet preparatory and transitional issues, such as being fulfilled. This is a key component
to the control of sulphur oxides (SOx) operating costs resulting from the change
the demand of the shipping sector, while ship implementation planning; impacts on to the successful implementation of the
and particulate matter emissions, by are of a magnitude that may cause serious
maintaining the supply for the use of fuels fuel and machinery systems; operational 0.50% global fuel oil sulphur limit.
limiting the sulphur content of the fuel commercial distortion if there is uneven
by the non-marine sector. As a result of considerations and crew awareness and
oil used onboard the ship, both within implementation of the standard.
this review, some concerns were raised training. Updated control mechanisms Amendments for uniform testing/
and outside of designated SOx Emission
with respect to fuel oil quality due to the and Port State control (PSC) verification verification protocols for fuel samples
Control Areas (ECAs). Under the 2008 Recognizing these concerns, the MEPC
expected increase of new fuels when actions will be considered, including were similarly progressed but still require
amendments, based on a delicate balance agreed to establish a new work output
transitioning, on a global scale, from 3.50% guidance on fuel oil non-availability further work. The progress is positive
of compromises, a step-wise reduction on what additional measures may
to 0.50%, and potential regional supply scenarios and a standard non-availability in that there was general agreement to
of limits was established. Modest near- be developed to promote consistent
deficits. Notwithstanding these concerns, report format. Guidance on safety and fuel develop a definition of “sulphur content”
term reductions of fuel oil sulphur content implementation of the 0.50% global
a need for legal and practical certainty was quality issues will also be incorporated. based on a single ISO standard, and that
limits were instituted in 2010 for SOx ECAs sulphur limit. This new output was given
18 19must begin the transition to use of 0.50%
compliant fuels at an appropriate time in
advance. The SIP guidance was issued as
MEPC.1/Circ.878.
Safety Implications
The other notable outcome of the
Intersessional Meeting was the
consideration of safety aspects associated
with the use of low sulphur fuels,
presented in a paper co-sponsored by
several Member States and industry
associations. Importantly, several safety
related aspects that could not be
associated with the use of low sulphur
addressed under the risk assessment
fuels were identified, and the Intersessional
measures of the SIP were identified.
Meeting agreed to recommend MEPC to
These relate to fuel oil parameters that
there would be a consistent testing protocol invite the IMO Maritime Safety Committee
cannot be addressed directly by the ship’s
applied in the same way to both MARPOL (MSC) 100 to consider this outcome.
crew, requiring laboratory analysis to Experience Building VI in a wholesale manner. Compliance
with the 0.50% global fuel oil sulphur
MARPOL Annex VI. In particular, proposals
should focus on fuel oil quality and
Phase (EBP)
(representative) samples taken during
accurately determine, or which cannot be standard is expected to be enforced on 1 reporting of non-availability of compliant
bunkering and “In-Use” fuel oil samples.
SIP Guidelines reliably ascertained under current testing
Proposal January 2020 in the same manner as the fuel oils, including the enhancement of the
The unresolved issues that require further
protocols. The identified parameters are: current 3.50% global standard, and the Global Integrated Shipping Information
work relate to how to incorporate reference
Considering the need for industry to have 0.10% standard within ECAs, are enforced System (GISIS) database for collection
to ISO Standards in IMO regulations, and A consortium of Member States and
timely and early access to aspects of • Stability today. Concentrated inspection campaigns and analysis of the data. This outcome
appropriately standardizing/defining industry associations submitted a
the consistent implementation guidance are being carried out by PSC regimes in addresses several of the concerns raised
• Compatibility
terminology used in the MARPOL document to the 73rd session of the MEPC
relevant to ship planning and preparation, anticipation of the transition, and strict regarding connotations associated with
regulations. Lastly, amendments to • Temperature (cold flow properties) on safety implications and respective
a circular on guidance on the development enforcement should be expected. the EBP as it relates to enforcement under
regulation 14 to standardize the designation challenges associated with 2020 compliant
of a ship implementation plan for the • Acid Number regulation 14, but still allows the essence
of in-use fuel oil sampling locations were fuels. The paper contained a proposal
consistent implementation of the 0.50% A pragmatic approach by Administrations of the proposal to be further considered at
generally agreed. • Flash Point to establish an EBP associated with the
sulphur limit under MARPOL Annex VI is sought specifically in those instances the next session of the MEPC.
was approved by the MEPC. The guidance • Ignition Properties worldwide availability of safe compliant
where a ship is not able to achieve
These amendments, and the current fuel oil. The proposal was submitted
includes a template for the development
draft of the consistent implementation
of a voluntary SIP, envisaged as a ship
• Cat Fines
further to the consideration of safety
compliance due to fuel non-availability
and fuel quality problems despite all best
Carriage Prohibition
guidelines, are being reported back to the
6th session of PPR in February 2019 for
management tool when preparing and
Although widely supported, when
discussing the above safety related aspects
implications associated with the use of
low sulphur fuel oil at the Intersessional
efforts. This is relevant regardless of the Amendments
updating procedures on a ship specific means by which a shipowner chooses
further development and finalization. PPR in more detail, some divergent views Meeting in July, and was intended as an
basis for actions that need to be taken to to comply with the standard. A benefit In association with the work plan on
will then forward its outcome to the next were expressed regarding the potential institutionalized data gathering measure,
safely transition the ship into using 0.50% expected from the proposal is that consistent implementation of the global
session of the MEPC scheduled for May severity of the situation in 2020 noting with the purpose of providing greater
compliant fuels prior to 01 January 2020. information gathered will provide greater fuel oil standard, the PPR Sub-Committee
2019 for subsequent approval. the identified issues occur at present and transparency and detailed information
The SIP is not mandatory; therefore, it is transparency to enable all Contracting also considered proposals to ban the
that previous experience with the shift to on the compliance situation after 01
not required to be reviewed or endorsed, Parties of MARPOL Annex VI to take carriage of fuel oil for use on board ships
Additionally, the Intersessional Meeting 0.10% compliant fuels in ECAs was positive. January 2020.
but may be a helpful reference during appropriate enforcement action in a that exceeds the 0.50% sulphur limit. The
submitted a report on two urgent However, it has been made clear that these
verification inspections. Regardless, early consistent manner in such situations. proposals were widely supported, as the
matters directly to the 73rd session of safety implications are not fundamentally The proposal had no intended impact on
planning and action will be crucial to carriage ban was seen to facilitate effective
the MEPC which was held from 22-26 new but are expected to become more the 0.50% standard, nor did it attempt
ensure the ship is in compliance when the Following an in-depth discussion, the enforcement of the requirement, ease
October 2018. The first urgent matter prevalent with the introduction of 0.50% to delay the effective date of 01 January
0.50% fuel oil sulphur content standard Member States who spoke were evenly administrative burdens during compliance
was for MEPC to approve a finalized draft compliant fuels on a magnitude of a global 2020, which can only be changed by an
takes effect on 1 January 2020. This is split on the proposal. As a compromise, verification, and facilitate consistent
of the ship implementation guidance scale. Regardless, the issue should not be amendment to regulation 14 of MARPOL
because there is no phase-in period when further concrete proposals are requested implementation. In doing so, it would
and a standardized template for a Ship considered only as a transitional matter Annex VI. There was no suggestion in
the standard changes from 3.50% to for consideration at the 74th session assure a level playing field and render the
Implementation Plan (SIP). Secondly, when shifting to the 2020 sulphur standard. the paper to delay or weaken the general
0.50% on this date. Therefore, the ship of the MEPC on how to enhance the need for more complex and burdensome
several potential safety implications enforcement provisions of MARPOL Annex
implementation of regulation 18 of at-sea verification methods moot.
20 21Some concerns were raised that the In October 2018, the MEPC adopted
proposed draft amendment to regulation the carriage prohibition amendments Summary
14 might be too simplistic to assure legal to regulation 14 of MARPOL Annex VI.
certainty of the provisions and to ensure Under tacit amendment procedures, the All ships are expected to be fully
the carriage ban was not interpreted as amendments are set to enter into force on compliant when the 0.50% global fuel
applying to ships exempted or allowed to 01 March 2020. Importantly, the entry into oil sulphur standard takes effect on
use an “equivalent arrangement” to meet force date of the carriage prohibition does 01 January 2020. It should be quite
the sulphur limit, such as an exhaust gas not in any way impact the effective date for clear that due to the established
cleaning system (EGCS). When permitted, the 0.50% global fuel oil sulphur standard. tacit amendment processes in
these arrangements allow the use of fuel MARPOL, there is no possibility to
oil with sulphur content exceeding the amend or delay the standard or its
required limits under MARPOL Annex VI, effective date prior to 01 January
as EGCSs remove SOx emissions from 2020. However, being aware of
the exhaust to a level equivalent to using the uncertainties and challenges
compliant fuel oil. associated with the consistent
implementation of the 0.50% global
Notwithstanding these concerns with the fuel oil sulphur standard, a consistent
amendment, during consideration at the approach is needed to safely address
MEPC it was clarified that equivalencies these challenges, while not delaying
can be applied to the standards in the enforcement of the standard
regulation 14 of MARPOL Annex VI, after it takes effect. Planning and
including the carriage prohibition, in preparation by all stakeholders is
the same manner as the current legal crucial for effective compliance and to
provisions allow, including ships exempted preserve the smooth flow of maritime
to undertake research trials of emission trade. There is still work to be done
reduction and control technology under at IMO to finalize the remaining
regulation 3.2 of MARPOL Annex VI. The supporting guidance for consistent
carriage prohibition also does not apply to implementation and to ensure safety
the carriage of fuel oil as cargo, taking into considerations are appropriately
account the specific definition of “Fuel Oil” addressed when transitioning to 01
in Regulation 2.9 of MARPOL Annex VI. January 2020 and beyond.
International Registries, Inc. and its affiliates (IRI) provide administrative and technical support to the Republic of the
Marshall Islands (RMI) Maritime and Corporate Registries. The RMI Registry is the second largest registry in the world,
surpassing 4,469 vessels and 162 million gross tons at the end of November 2018. IRI has a network of 28 worldwide
offices located in major shipping and financial centers throughout the world that have the ability to register a vessel,
including those under construction, record a mortgage or financing charter, incorporate a company, issue seafarer
documentation and service clientele. The most important asset to the RMI Registry is its customers and IRI strives to
provide them with full service from any office, 24 hours a day.
22 231. Compliance options are dependent on ship type and 2. Do you have any advice on how to best approach the
IMO 2020 Special Edition numerous other operational and economic variables. Could implementation date?
you give a brief overview of what should be considered when
0 6 L LOY D ’ S R E G I S T E R ( L R ) : making a decision and what you see in terms of trends within
The challenges posed by the Sulphur 2020 fuel change are
not to be underestimated; timely planning, preparation and
the industry?
‘Sulphur 2020’ Putting aside those who have already put in place long-term
engagement between stakeholders and proactive fuel change
management to enable the full scope of ship adaptability to
alternative fuel strategies, when it comes to complying with the
the changing bunkering scene, will be crucial to ensuring the
Sulphur 2020 limit, shipowners and operators have essentially
marketing potential of the ship is maintained. This applies to all
two options – one is to switch to 0.50% compliant fuel, the
sectors of the bunker supply and fuel user chain.
other option is to install an approved abatement technology
such as an exhaust gas cleaning system (EGCS) also known as
Questions & Answers with Tim Wilson a ‘scrubber’ and continue to burn High Sulphur Fuel Oil (HSFO).
With the Sulphur 2020 limit coming into force in just 12 months
shipowners and operators should already be planning and at the
Both options require careful consideration and the second
point of deciding what their particular strategy for compliance
Implementation of the MARPOL Annex VI Reg. 14.1.3 0.50% will not necessarily eliminate the need for 0.50% compliant
is. The IMO has recommended that shipowners and operators
sulphur limit for fuel oil, used on board ships operating outside fuel storage. We are supporting clients through this decision-
engage a ship implementation plan for each ship in their fleet,
making process, including through the use of our ‘Options
emission control areas, shall enter into effect on 1 January 2020. considering the known and potential safety risks in the process
Evaluator’ tool which looks at the main options available, and
of switching from the HSFO we have today to VLSFO compliant
LR recognises this is presenting one of the most significant thus enabling clients to make their own assessment of the most
fuel and defining the measures that will mitigate those risks. The
challenges to all stakeholders in the marine fuel oil market, from viable way forward – considering the commercial and economic
preparatory steps prior to phasing of the loading of VLSFO will
Tim Wilson
the producer to the user. implications of each option to maintain their advantage in
differ ship by ship and will need to be negotiated with the fuel
Principal Specialist Fuels the market.
purchaser, for the most part this is the charterer, considering
Lubes and Emissions at Lloyd’s Register
(LR).
The transition period has started; decisions need to be made, not only the economic implications but also the ship’s system
In terms of trends, some charterers have seen the value of
preparations and possible modifications needed as well as
and implementation plans need to be drawn up. Options at EGCS so now VLCCs (very large crude carriers), and bulker
crew familiarisation of the new bunker supply environment to
this stage are clear - essentially, compliant fuel oil or High carriers are potentially looking to install them in response. Yet,
mitigate any operational and safety risks. The main objective
Sulphur Fuel Oil (HSFO) in conjunction with exhaust gas shipowners and operators must understand that scrubbers are
being that by 01 January 2020 the ship is fully compliant for
not necessarily such a straightforward solution, having their
cleaning systems (EGCS). The right choice is less obvious and both outside and inside ECA operations, having achieved this in
own challenges – the availability of HSFO being a key one,
a controlled, safe and forward-planning manner.
must be evaluated based on your ships’ specific operation and the degree of price differential to the Very Low Sulphur Fuel
risk criteria. (VLSFO – 0.50%) another along with the additional OPEX and
Shipowners and operators are then recommended to enact a
maintenance placed on the crew.
‘fuel change management plan’, to do that they are advised
to complete a risk assessment to work out what changes they
Compliant fuel also comes with its challenges; considering their
need to make to their current practices, procedures and ship
current limited availability, uncertainty reigns and concern is
fuel system design. When this is complete, the crew need to
therefore being expressed as to whether these 0.50% fuels will
be made aware of these changes. The timing of this change is
still meet the quality requirements specified in the international
important in that this transition is best completed sooner rather
marine fuel specification, ISO 8217, when the supplier is focused
than later so that the ship/fleet and crew are well prepared and
on meeting the 0.50% target and is perhaps less focused on the
familiar with the new fuels, well before 01 January 2020.
critical operating parameters. The ISO TC28 SC4 WG6 committee
(which develops the ISO 8217) has formally advised the market
It’s important that shipowners and operators discuss their plans
that all marine fuels must meet the requirements of ISO 8217 in
with their stakeholders in the supply chain, identifying any
its entirety and that the requirements for ship’s fuels to meet
concerns and agreeing expectations. For example: charterers
the current conventional diesel propulsion arrangements do not
might need to load the more expensive distillate grade fuel
change with the reduction in the sulphur content.
because that is the only available option in way of compliant
fuel, which will have commercial implications. They will need to
understand that there will likely be no choice and better forward
planning might help to limit the risk. Suppliers will need to know
what is the specific fuel specification that the ship is willing to
receive and in turn must be willing to provide, in advance, the
typical specification of the fuel that will be delivered and when,
so the necessary preparations can be made.
24 253. If you select the option of installing an exhaust gas cleaning It is also worth noting that Singapore’s Maritime Port Authority The IMO has released a circular, MEPC 73/5, recommending 6. We have recently seen issues with contaminated fuel and
system (EGCS) what are the key considerations you should be (MPA) has recently announced a ban on the discharge of wash ships create a ship implementation plan. This is encouraged as quality concerns, what is in place to protect shipowners/
thinking about? water associated with the wet, open-loop configuration of the process of transition starts now and should be completed operators in light of the Sulphur 2020 limit?
We are informed that around 100 EGCS are being ordered per exhaust gas cleaning systems, including the discharge from any before the 01 January 2020 date. We can guide fleets through ISO-8217 is the marine fuel standard that gives the criteria of the
month and roughly 20 manufacturers, ranging in experience, closed-loop bleed off arrangements. The ban will reportedly the process of assessing the adaptability of a ship to manage core parameters which must be met by any fuel if it’s to be used
are ready to install them. However, the retrofit of an EGCS is become effective from the onset of the IMO-mandated global the uncertainties and variables of the compliant fuels being onboard a ship. Whilst Clause 5 of ISO 8217 does not prescribe
not an easy undertaking and it is estimated that it takes at least limit on sulphur in fuel on 1 January 2020. Vessels fitted with supplied along with the process of mitigating the identified risks specific test methods, it is an all-encompassing requirement
one year to plan and implement. There are a list of activities open-loop systems will be required to use compliant fuels in and safety concerns. specifying that it is unacceptable to supply, blend or allow even
and considerations a shipowner or operator must take before Singapore port waters or alternatively, ships fitted with hybrid an accidental ingress of any product(s) that would render the
systems will be required to switch to the closed-loop mode 5. You mentioned the importance of fuel management practices,
going down this route. The following table sets out the typical fuel unacceptable for its intended use.
could you explain this in more detail?
process, following a feasibility study, once the decision is made of operation.
to proceed to commissioning. However, it is dependent on ship All ships should have a fuel management protocol onboard, This is more definitively explained in the informative Annex
4. If intending to use compliant fuel oil, what do you need to which is likely to be a procedure covered in the company’s ship B of ISO 8217, which states the impracticability of carrying
type and many other influencing factors, the table also does not
know?
consider the time needed to consider the feasibility of fitting an management system, and is an important procedure addressed out chemical analysis and so expresses its expectation on the
EGCS. Outside Emission Control Areas (ECA) operations, the Sulphur in their International Safety Management (ISM) code. However, supply chain to have in place adequate quality assurance and
2020 limit will result in an increase in fuel formulations being shipowner and operators need to go beyond this and ensure management procedures to ensure that the resultant fuel is
PROCESS MONTHS offered and there’s uncertainty regarding the degree of diversity their crew have a proactive mindset to comply with the Sulphur compliant with the requirements of Clause 5.2: “The fuel shall be
EGTS System selection 2 of these formulations, so shipowners and operators will need to 2020 limit. This should address an additional fuel change free from any material at a concentration that causes the fuel to
Selection of Vendor and Engineering 2 consider what structural and procedural adjustments onboard plan, for which the ship implementation plan will include key be unacceptable for use in accordance with clause 1 (i.e. material
consultant will need to be made. Whether that’s considering loading a light preparatory milestones, so considering whether there is a need not at a concentration that is harmful to personnel, jeopardises
On board survey: 3D-scanning and 3 product compared to a heavy one, and or making greater efforts to update their fuel management strategies to include bunker the safety of the ship, or adversely affects the performance of
project planning to segregate and avoid comingling fuels - industry experts warn segregation and fuel compatibility. the machinery”.
Engineering analysis 3 against mixing one bunker with another as there’s a high risk
Class approval 1 of destabilising the fuels and in most situations, crews can’t This proactivity towards fuel management could include using For Sulphur 2020, there is some speculation that because we’re
Shipyard selection & preparing retrofit 3-4 easily assess the degree of risk of this happening until the fuel the new bunkers loaded within two days of receipt while other going to have a diverse range of fuel blends there will be quality
specification is already onboard, so segregation of bunkers is important. The fuels of known acceptable quality are still retained onboard. This issues. This might not necessarily happen because all residual
Production: Shipping EGTS & 3-4 weeks next step is managing the diversity of the viscosities of the fuels provides the advantage of being able to address any issues with fuels are for the most part blended, and blending has been a
pre-fabrication of piping and managing any incompatibility thus observed between the the suppliers at an early stage of receipt, before the contractual common practice in the shipping industry for many decades, but
Installation and commissioning 3-4 weeks different bunkers onboard: if crews must mix, then working out time conditions run out with the supplier to make any complaint it’s right to be cautious.
the ratio’s involved and any potential resultant properties is key. about the fuel that has been supplied. Bringing the crew on
*EGTS (exhaust gas treatment system) and EGCS (exhaust gas board early with changes and amendments to the operational Another aspect of fuel quality and contamination drills down
cleaning system) are interchangeable terms Going forward, the fuel will still be diesel but the formulations procedures will limit the risk of any unexpected issues occurring to the choice of supplier. The well-established oil majors are
will change so a proactive fuel change management plan and putting the operations of the ship at risk. It is good to test already declaring their hand in bringing in a range of compliant
It is also important to consider the time the vessel will need onboard each ship is required, such as a Plan, Do, Check, and plan-ahead so everybody knows what to expect when the 0.50% products all meeting ISO 8217 requirements and
to be off hire during the installation and the associated Act approach, amending current fuel management practices time comes, with plans in place to mitigate any issues and/or risks. offering sound technical support. The selection of the supplier
implications. We can give guidance through a feasibility study, as required will help crews manage change. Many ships will is more important considering recently highly publicised
reinforcing the need to start planning sooner rather than later. have this in place already, so it’ll be a case of scrutinising and cases of deleterious contamination of fuels. There is a higher
adapting it to fit with the Sulphur 2020 limit. The plan requires expectation that bunker buyers will be seeking more assurances
If a shipowner or operator has opted to install an EGCS, they will focused and clear guidelines for each scenario the crew might from suppliers that they are heeding to the ISO 8217 Annex B
require a stringent and robust approach to selecting the right face, this plan should then be communicated to the crew to raise expectations on suppliers where it states ‘… It is therefore not
manufacturer and EGCS type, we can offer consultancy support awareness and build a relationship with management, so practical to require detailed chemical analysis for each delivery
in this area to help the client determine what is on offer and if there’s any concerns or updates every stakeholder will be of fuels beyond the requirements listed in Table 1 or Table 2.
what cannot be overlooked, such as structural assessments each made aware. Instead, a refinery, fuel terminal or any other supply facility,
owner and operator will need to undertake before selecting an including supply barges and truck deliveries, should have in
EGCS specific to each ship. place adequate quality assurance and management of change
26 27You can also read
