Bearing down on the industry full steam ahead is the IMO (International Maritime Organization) 2020 sulfur cap deadline.
The regulation has the potential to disrupt automotive industry logistics as all vessels will have to use marine fuels with a sulfur content of no more than 0.5% against the current limit of 3.5% in an effort to reduce greenhouse gas emissions. These new regulations come into force as of January 1, 2020, with heavy penalties for the shipping lines should they not be adhered to.
“Although this regulation change will not come into effect until January 2020, we are going to be seeing the impact of this throughout 2019 as the shipping lines make preparations,” says Greek car carrier Neptune. The main ways shipping lines will look to reduce their sulfur content are by either using new blends of fuels that would meet the sulfur requirements, burn liquefied natural gas, methanol or biofuels for vessels with the necessary equipped engines or install exhaust gas cleaning system (known as scrubbers). The scrubbers are designed to remove the sulfur oxides from the ship’s engine and boiler exhaust gases which means the ship can continue using higher sulfur fuels. All of these measures will come at an additional cost, warns Neptune. Some estimates predict that fuel bill for the global shipping industry could increase by up to US$60 billion annually. “The consequence of the IMO 2020 will inevitably see an increase in freight rates to cover the shipping line costs. IMO 2020 will also see slower transit times worldwide and potentially more transshipments due to the need for refueling. Port rotations will also be changed to try to alleviate the slower transit times. Shipping lines are already looking to change rotations now which is consequently impacting water transits. In preparation for the impending regulation changes, shipping lines have already begun implementing surcharges to cover the initial costs. We fully expect to see this trend continue throughout 2019. In order to try and mitigate these charges for our customers, we will continue to look at all available options to ensure the most competitive services are used,” says the Neptune website. Neptune Lines is one of the leading independent car carrier operators in the short sea transportation sector worldwide.
The company is a finished vehicle logistics provider, offering transportation and shipping solutions to manufacturers and shippers of cars and high and heavy cargoes. Neptune has a modern fleet of Pure Car & Truck Carrier (PCTC) vessels with an extensive operational expertise and an expansive agency network. It provides short sea transportation in Europe, extending from the Atlantic/North Sea ports of Zeebrugge, Southampton, Le Havre, Vigo and Casablanca in the west, to the Black Sea in the east.
Neptune Lines-owned vessels are equipped with multiple thrusters, high-load capacity ramps, eco-friendly propulsion systems with controllable-pitch propellers (CPP), shaft generators for high reliability and operational efficiency. Currently, Neptune Lines operates 17 PCTC vessels (owned or chartered), with cargo capacity ranging between 1,200-4,500 cars. The weighted average age of its fleet - one of the youngest in Europe - is 8.5 years. The fleet's capacity for trucks/trailers is approximately 24,500 lane meters. Its latest new builds are Neptune Galene and Neptune Thalassa, PCTCs of 3,800 car capacity each, delivered in 2014 from Hyundai Mipo Dockyard. These ships are enhanced with high-end environmental technologies, resulting in improved energy efficiency and reduced environmental footprint. Latest acquisitions (2015) include the Neptune Hellas and Neptune Horizon, PCTCs of 3,800 car units, built in 2009 and 2010 respectively, at the same yard as its other new building. “At Neptune Lines we conduct our business to the highest possible level of performance and implement regular monitoring and auditing procedures to safely deliver the cargoes on board our vessels to our customers. We strive to become a leader in quality and as our customers expect this from us, we rise to meet this challenge. We are proud to have a near 0% sea transportation damage ratio for cargo and one of the lowest claim levels in the industry,” says the company.
Automotive Industries (AI) asked Melina Travlos, President and CEO, Neptune Lines, how the line is gearing up for the new IMO 2020 sulfur rules. Travlos: Consistent with our sustainability targets we are taking all necessary measures to reduce sulfur oxide emissions and of course achieve regulatory compliance. As from January 2020 some of our vessels will start using low-sulfur marine fuel. In an effort to increase our competitiveness and continue offering our services at the best possible cost to our customers, we have also decided to invest in scrubber technology and retrofit a number of our vessels with exhaust cleaning scrubber systems
AI: How will this add to the cost of freightage for customers? Travlos: We have proactively discussed the possible financial impact with our customers and agreed relevant changes to bunker adjustment factor formulas. The price of the fuel will in the end determine what the impact will be.
AI: What are you doing in 2019 to prepare for the changes? Travlos: The preparation for the IMO 2020 sulfur rules and the introduction of the Ballast Water Treatment Convention have forced us to make large investments in these technologies in 2019. In the long run we expect these investments to keep our fuel bills lower and our environmental footprint smaller. AI: How important has the ‘greening’ of the shipping industry been to Neptune? Travlos: Very important. Our efforts started in 2007 and we have implemented many “green” projects such as using foul release coatings on most of our owned fleet, propeller replacements, voyage optimization and monitoring solutions and many smaller investments such us LED lighting on cargo decks, taking initiatives to explore cold ironing possibilities using variable speed drives on motors on our vessels and installing multiple thrusters to increase maneuverability in ports and effectively reducing reliance on tugs, which translates into less combined consumption in ports.
AI: How has Neptune worked with employees, ship builders, customers, to reach this standard? Travlos: We have close and long-standing cooperation with all our customers, service providers and shipbuilders, and our people are fully informed and supportive of all our activities.
AI: What are Neptune’s plans for pure car carriers? Travlos: We are presently investigating the needs of our trades, which will dictate our future newbuilding program. We are also evaluating the alternative fuel solutions to be used on these vessels.
AI: Why do pure car carriers make business sense? Travlos: Pure Car Carriers, or better Pure Car and Truck Carriers, carry a large number of vehicles safely and reliably in liner service structures at minimal risk of damage. History has proven that this mode of transport is still the safest and most risk-free way to transport finished vehicles at competitive costs, mainly to the benefit of the customer. We should also not ignore the fact that PCTCs are designed to carry a multitude of cargo extending from construction and agricultural machinery to transformers and wind generator parts, as well as boats and various types of rolling cargoes. All cargo is safely stowed and secured under deck in a clean and dry environment