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How can shipowners comply with the 2020 global sulphur limit economically?

Citation

Zhu, M and Li, KX and Lin, K-C and Shi, W and Yang, J, How can shipowners comply with the 2020 global sulphur limit economically?, Transportation Research. Part D, 79 Article 102234. ISSN 1361-9209 (2020) [Refereed Article]

Copyright Statement

Copyright 2020 Elsevier Ltd.

DOI: doi:10.1016/j.trd.2020.102234

Abstract

To comply with the International Maritime Organization’s (IMO) 2020 global sulphur limit for maritime shipping, low-sulphur fuel oils (LSFOs) and scrubbers are the most commonly applied approaches in practice, as a result of which, however, shipowners’ profits will be affected. This paper is to identify a more economical sulphur reduction approach, for which a 19,000 twenty-foot equivalent unit container ship sailing between Far East and Europe is set as a case study. Using the cost-benefit analysis, the use of scrubbers is proved to be more economical due to the higher net present value and lower annual unit cost. The sensitivity check suggests that a scrubber is more attractive in most cases except for two scenarios where LSFOs are more popular. That is, a scrubber is losing its attractiveness when prices of LSFOs and heavy fuel oil (HFO) move in the same direction with the price spread is equal to or below US$56 per ton, and when prices of HFO rise and prices of LSFOs fall with the price spread is equal to or below US$16 per ton. This finding well explains the current popularity of installing scrubbers among shipowners although retrofitting still faces many challenges.

Item Details

Item Type:Refereed Article
Keywords:IMO 2020 sulphur limit, low-sulphur fuel oils, scrubber, cost-benefit analysis, sensitivity check
Research Division:Commerce, Management, Tourism and Services
Research Group:Transportation, logistics and supply chains
Research Field:Road transportation and freight services
Objective Division:Transport
Objective Group:Water transport
Objective Field:Coastal sea freight transport
UTAS Author:Shi, W (Dr Wenming Shi)
ID Code:137008
Year Published:2020
Web of Science® Times Cited:5
Deposited By:Maritime and Logistics Management
Deposited On:2020-01-28
Last Modified:2020-04-30
Downloads:2 View Download Statistics

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