Post on LinkedIn by Pablo Rodas-Martini Author and speaker, bewitched by ships and ports, passionate for the decarbonization of the maritime industry, always trusting in science, and with a firm grasp of maritime and port economics.

A thought on climate change: ships won’t be able to hide their emissions anymore. Their emissions of SOx, NOx, PM, and CO2 will be tracked at all times in the near future. Between sniffer drones, planes equipped with sniffers, stationary sensors, and, on the deep-sea, satellites, shipping companies will be forced to reveal the full extent of their emissions—no more greenwashing by many of them on their sustainability reports! Read here an article from Yale Environment 360 about the critical role of satellites.

“Tracing emissions to their source is no easy task, however. Releases are often intermittent and easy to miss. Ground-based sensors can detect leaks in local areas, but their coverage is limited. Airplane and drone surveys are time-intensive and costly, and air access is restricted over much of the world. That’s where a crop of recently launched and upcoming satellites with increasingly sophisticated tools comes in.”

“A cluster of satellites launched by national space agencies and private companies over the last five years have greatly sharpened our view of what methane is being leaked from where. In the next couple of years, new satellite projects are headed for launch — including Carbon Mapper, a public-private partnership in California, and MethaneSAT, a subsidiary of the Environmental Defense Fund — that will help fill in the picture with unprecedented range and detail. These efforts, experts say, will be crucial not just for spotting leaks but also developing regulations and guiding enforcement — both of which are sorely lacking.”



UK calls for global 2050 net-zero shipping emissions target

The UK backs a world-leading absolute zero target for international shipping emissions by 2050, which would need to be agreed by the International Maritime Organization, the UK government said in a statement Sept. 13.

This could be a tall order. “It’s an extremely ambitious target and not dependent solely on [the] shipping industry to deliver it,” Tony Foster, CEO and CIO of marine asset manager Marine Capital said on the sidelines of a panel discussion during London International Shipping Week 2021. “Policy and regulation have to play a major role, including, almost certainly, carbon taxes.”

PUBLISHED SEP 13, 2021 14:01 UTC BY S & P Global

 UK calls for global 2050 net-zero shipping emissions target | S&P Global Platts (

Can The Global Shipping Industry Really Go Green?

As environmental concerns become increasingly pressing for governments and businesses alike, the shipping industry is taking steps to reduce its carbon footprint. In late August Danish shipping company Maersk, the world’s largest container shipping line, announced that it had invested $1.4bn in eight new vessels that will be powered by methanol rather than oil-based fuels.

The ships, set to be delivered in 2024, represent 3% of the company’s total container capacity. They will replace older ships in the fleet and are expected to save up to 1m tonnes of carbon dioxide per year.


 Can The Global Shipping Industry Really Go Green? |

Asia fuel oil: Cash premiums higher as cargo demand intensifies

SINGAPORE Cash premiums for cargoes of Asian fuel oil were mostly higher on Monday, lifted by higher bids and deal values in the Singapore trading window.

Sentiment in the 0.5% very low-sulphur fuel oil (VLSFO) market has firmed recently on expectations of tightening supplies, particularly for cutter stocks, over the near term, trade sources said. Sluggish bunker demand in the Singapore hub, however, may cap gains. In the high-sulphur fuel oil (HSFO) market, prices have been bolstered by tight supplies that are shared among few suppliers. But the surge in prices may soon crest as peak seasonal power generation demand in the summer begins to fade, the trade sources said.

Published 24th August 2021 by Business Recorder

Asia fuel oil: Cash premiums higher as cargo demand intensifies – Markets – Business Recorder (


Asia Fuel Oil-380-cst HSFO cash premium at over 1-yr high

SINGAPORE: Cash premiums for cargoes of Asia’s 380-cst high-sulphur fuel oil (HSFO) climbed to their highest since January 2020 on Monday at $16.25 a tonne to Singapore quotes, lifted by sustained demand and tight high-sulphur fuel supplies.

In the 0.5% very low-sulphur fuel oil (VLSFO) market, cash differentials were also slightly higher as deal values strengthened.

However, sluggish bunkering demand and more adequate low-sulphur fuel supplies are expected to keep a lid on sentiment in the VLSFO market, trade sources said.

Published 14th September 2021 by Business Recorder

Asia Fuel Oil-380-cst HSFO cash premium at over 1-yr high – Markets – Business Recorder (

Skou urges IMO to ban fossil fuelled ships by 2035

Søren Skou has used his first mover advantage in the green shipping rush to make an ambitious call on regulators to phase out all fossil fuelled ships by the middle of the next decade.

Skou is the CEO of Maersk, the world’s largest containerline, a company that has ordered world-first green methanol dual-fuelled boxships in recent months.

Writing on LinkedIn on Friday, Skou suggested shipping should follow the path laid out for the automotive sector in Europe.

“The European Commission is proposing to end production of combustion engine cars in 2035. The International Maritime Organization should do the same for fossil fuelled ships with ambitious targets and measures to decarbonise shipping,” Skou proposed.

The IMO’s Energy Efficiency Design Index in its coming phases could be the instrument to make the end date for fossil fuelled ships a global reality

Going in to further detail, Skou suggested that both a global carbon tax and an end date for fossil fuelled ships would send a strong signal to the shipping ecosystem including yards and fuel producers.

A global “drop dead date” would address future newbuilt vessels, complementing the impact of existing ships from a carbon tax, Skou suggested.

Skou is in favour of a carbon tax of up to $450 per tonne of fuel to bridge the price gap between existing bunker fuels and the carbon neutral fuels of tomorrow.

“As the price gap narrows, the IMO’s Energy Efficiency Design Index in its coming phases could be the instrument to make the end date for fossil fuelled ships a global reality,” Skou proposed.

Maria Skipper Schwenn, executive director for security, environment and maritime research at Danish Shipping, commended the idea, writing on the same social media platform: “Strong and important message from a first mover that walks the talk.”

Maersk has eschewed going down the LNG-fuelled path of many of its rivals.

In December 2018, Maersk came out as the first major shipping line to pledge to be carbon neutral by 2050.

In October 2019 the Danish carrier identified three fuels to focus on in its decarbonisation drive, namely renewable methanol, biogas and ammonia.

ClassNK Publishes Infographic on use of VLSFO

ClassNK has issued a poster for onboard use which details the common main engine issues and recommended countermeasures when using very low sulphur fuel oil (VLSFO).

After examining reported issues along with the properties of compliant fuel oils, the class society says it has compiled recommended measures for early detection and prevention of issues on board. The information has been released in a poster format so that crew members can quickly refer to it in case of any problems.

The poster can be accessed here

What $70+ oil means to container, tanker and dry bulk shipping

What $70+ oil means to container, tanker and dry bulk shipping

Spread between VLSFO and HSFO marine fuel is highest since March 2020

The price of Brent crude topped $72 per barrel Thursday, with West Texas Intermediate above $70. As the price of oil goes, so goes the price of marine fuel. And that means higher costs for ship operators, and in the case of the container sector, more fuel surcharges passed along to cargo shippers.

Higher bunker (marine fuel) costs affect different shipping segments differently. American Shipper looked at each segment, and for a broader perspective on where pricing will go next, interviewed Richard Joswick, head of global oil analytics at S&P Global Platts.

How shippers of containerized goods are affected
In the container sector, liner companies pass along higher fuel costs via a bunker adjustment factor (BAF). Carrier filings of BAFs to Distribution Publications Inc. (DPI) show that BAFs plunged in Q3 2020, after the COVID-induced collapse in oil price, and have been ramping back up ever since.

Asia-West Coast BAFs of carriers CMA CGM, COSCO, Evergreen and OOCL that have already been filed for Q3 2021 are up by an average of $229 per forty-foot equivalent unit (FEU) or 69% versus the same period last year. Asia-East Coast BAFs of these four carriers for the third quarter are up an average of $409 per FEU or 78% year on year.

(Charts: American Shipper based on data from DPI)

In normal times, such price increases would garner more attention. But in the current situation, where shippers are often paying well over $10,000 per FEU from Asia to the U.S., the rising BAF is a drop in the bucket.

Steve Ferreira, founder and CEO of Ocean Audit, told American Shipper, “Two years ago, this would have been a bigger story. Now, for shippers, it’s just another nail in the coffin. At this point, I don’t even think the logistics folks are paying attention to bunkers. I think the BCOs [beneficial cargo owners] should do a better job of negotiating BAFs, given the egregious rates they’re paying.”

Ferreira also said that BAFs being offered by non-vessel-operating common carriers (NVOCCs) are “substantially higher” than what liners are posting for the same dates and routes. “They [NVOCCs] are marking it up,” he claimed.

Scrubber implications across all segments

From the shipowning perspective, one effect that spans all the major segments — container, tanker and dry bulk — involves exhaust gas scrubbers.

Since Jan. 1, 2020, under the IMO 2020 regulation, ships without scrubbers must burn more expensive 0.5% sulfur fuel known as very low sulfur fuel oil (VLSFO) or 0.1% sulfur marine gas oil (MGO). Ships with scrubbers can continue to burn cheaper 3.5% sulfur fuel known as high sulfur fuel oil (HSFO).

According to pricing data from Ship & Bunker, the HSFO-VLSFO spread hit $121 per metric ton on Wednesday, its highest level since March 5, 2020. The spread has been at $100 or above throughout this year — and more shipowners are now opting to install scrubbers to capture the savings.

Prices are average for top 20 global bunker hubs (Chart: American Shipper based on data from Ship & Bunker)

How container liner operators are affected

The question for container liner operators is: Does BAF income from their cargo shippers entirely offset fuel-price increases? Are liners taking a loss on bunker costs or are they taking a profit, by passing along more costs to shippers than liners pay?

Liner contract earnings from shippers are directly affected by BAFs. During the conference call for Q3 2020 results, Maersk executives said that higher spot rates were offset by declining contract rates pulled lower by bunker clauses as fuel prices decreased. That dynamic should now reverse. With BAFs increasing, liners’ reported contract rates should not only benefit from the higher annual rates that were recently negotiated, but also from BAF upside.

Meanwhile, liners’ actual fuel spend has become much more unpredictable given extreme port congestion around the world. On one hand, ships are reportedly sailing faster on backhaul runs to make up for lost time, and fuel consumption is exponential to speed. On the other hand, ships that are stuck at anchor for weeks are burning much less fuel.

Yet another variable: What type of fuel are container ships burning, VLSFO or HSFO? Of all the various ship categories, larger container ships have installed the most scrubbers — they are burning much more HSFO than VLSFO.

According to data from Clarksons Research, 67% of ultra-large container ships on the water (defined by Clarksons as having at least 15,000 twenty-foot equivalent units of capacity) now have scrubbers. An additional 5% of the existing fleet is due for retrofits. Of newbuilds on order in this vessel class, 78% will be scrubber-equipped. Including existing and new ships, 74% of the ultra-large container ships are set to have scrubbers. This is up from 70% in January and 60% in January 2020.

How tanker owners are affected

In the tanker sector, the rise in the price of oil is a positive sign for future cargo demand, both on the crude and product tanker fronts. But tanker operators are extremely exposed to the spot market, and in a spot voyage deal, the operator pays for fuel. The rising cost of marine fuel is a negative for costs.

Tanker rates remain extremely depressed. Tankers with scrubbers save money on fuel, but that only means they’re bleeding less cash than tankers without scrubbers.

According to Clarksons, older VLCCs (very large crude carriers; tankers that carry 2 million barrels of oil) earned the equivalent of $3,400 per day in the spot market on Thursday, with rates for older scrubber-equipped ships more than double that — $8,200 a day — due to fuel savings. Modern “eco” nonscrubber VLCCs built in 2015 or later were earning $9,700 per day, modern VLCCs with scrubbers $13,100 per day.

But the all-in cash breakeven of a VLCC is around $22,000-$25,000 per day, according to analyst estimates. Even a modern VLCC with a scrubber is heavily in the red.

Nevertheless, owners of large tankers continue to embrace scrubbers. According to data from Clarksons, 40% of VLCCs on the water now have scrubbers, with an additional 2% of existing VLCCs due for retrofits. Of VLCC newbuilds on order, 43% will have scrubbers. Altogether, including existing and ordered ships, 42% of VLCCs are set to use scrubbers. That’s up from 40% in January and 35% in January 2020.

Many of the initial tanker scrubber refit plans were delayed in Q4 2019 and H1 2020 because rates were extremely high. The last thing an owner wants to do is put a tanker in the yard at the very moment returns are booming. But the market was the mirror opposite in Q4 2020 and Q1 2021. Rates were so low that owners accelerated drydockings and brought ships into yards ahead of schedule because it was the best time to be out of the spot market, allowing more scrubber retrofits.

Jefferies analyst Randy Giveans confirmed, “Owners are certainly continuing to retrofit large tankers with scrubbers, especially as rates remain so weak and the HSFO-VLSFO spread widens. Even at a $100 per ton spread, the VLCC premium is at least $4,500 per day, which is very meaningful at current rate levels.”

How dry bulk carrier owners are affected

The more time a ship is at sea, the more savings from scrubbers. As a result, scrubbers make more economic sense on larger ships because they sail longer routes. Just as scrubber penetration is highest on ultra-large container ships and VLCCs, it is highest in the dry bulk sector among Capesizes (bulkers with capacity of 100,000 deadweight tons or more).

Clarksons data shows that 42% of on-the-water Capesizes already have scrubbers, plus another 1% set for retrofits. Of Capesizes on order, 41% will feature scrubbers. Including existing and new ships, 43% of Capesizes are set to have scrubbers. That compares to 42% in January and 34% in January 2020.

Savings derived from the HSFO-VLSFO spread are shown over time by the scrubber and nonscrubber Capesize indices compiled by S&P Global Platts. Its Cape T4 index assessed the rate for nonscrubber Capes at $19,920 per day on Wednesday. The assessed rate for scrubber-equipped Capes was $23,316 per day due to fuel savings, $3,396 or 17% higher.

TCE rate = time-charter equivalent rate (Chart: American Shipper based on data from S&P Global Platts)

Unlike tankers, dry bulk ships are making money, so scrubbers actually increase earnings as opposed to decrease losses. According to various analysts, the all-in cash breakeven for a Capesize vessel is somewhere between $13,000-$17,000 per day.

What’s next for marine fuel prices?

Several factors are driving marine fuel prices and spreads. One is the price of oil. The recent rise has spurred chatter on much higher prices to come. Joswick of S&P Global Platts doesn’t agree.

“The price of around $70 does not surprise us. Global demand is improving and the huge inventory surplus we saw in 2020 is being worked off and is mostly gone. A lot depends on what happens with OPEC — which is waiting to see if demand increases before they increase their production more — and with Iran. We think some sort of deal with Iran [with the U.S., on sanctions] will probably occur. The question is when.”

Joswick believes that “as we get towards autumn, oil prices are more likely to go down than up. The fundamental outlook is that it will be tightest through the summer and then ease after that. We don’t see any fundamental reason for oil prices to skyrocket.” That, in turn, implies no reason for marine fuel pricing to skyrocket.

As for the spread, there are developments that could push the price of VLSFO higher and the price of HSFO lower, benefiting scrubber economics.

On the VLSFO side, jet fuel is an important issue. COVID caused jet-fuel demand to collapse, but demand is rebounding with the return of domestic air travel. Nonscrubber ships consume a lot more VLSFO than MGO, and jet-fuel demand is more linked to MGO than VLSFO pricing, but there is a connection between jet fuel and VLSFO.

If there is less demand for jet fuel, some of the molecules that would have otherwise gone to jet fuel go into the diesel pool and some of the heaviest components with higher boiling points can be used for the creation of VLSFO (a negative for VLSFO pricing). When there is more demand for jet fuel, those extra molecules are reduced (a positive for VLSFO pricing).

“We’re getting jet fuel demand back, which is supportive of diesel and MGO and to a lesser extent, VLSFO,” explained Joswick. MGO “is getting stronger, and the key question is where VLSFO [fits in the equation]. VLSFO had been moving in lockstep with MGO, but it’s not right now.”

On the HSFO side, the issue is refinery utilization. When refinery utilization is low — as it was during the peak COVID period — less HSFO is created. If there is less HSFO to process, it is easier for the most efficient units of the refining system to convert that HSFO to diesel. When refinery utilization increases, as is happening now, less efficient units are required to convert the HSFO.

“If you start bringing on units that are less efficient, it is only economic if the price spread between diesel and HSFO is wider. When that happens, the price of HSFO goes down relative to diesel,” explained Joswick.

The VLSFO tailwind and HSFO headwind are positive for scrubber economics. But Joswick emphasized that this will not lead to the extreme spreads seen in Q4 2019 and Q1 2020, at the time IMO 2020 was implemented.

“We should expect some widening of the spreads over time, but we’re not going to see a [spread] spike like we had before. The problem with IMO 2020 was that it was only announced three years prior to implementation and it usually takes refiners five years to build something. Well, we’re now going on five years. The new facilities are coming online. So, there will be a gradual widening [of the spread] but we’re not going to see a repeat of IMO 2020.”

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