THE regulatory switch to lower-sulphur marine fuels won’t deliver any anticipated boost to the capesize and panamax freight market says SwissMarine, one of the world’s largest dry bulk charterers.

SwissMarine’s freight analyst, Joe Tobin, forecast some 22% of the global fleet of around 2,000 capesize vessels will be fitted with scrubbers over the next 12 months. His assessment was based on 250 capesize vessels and 25 very large ore carriers as well as the entire valemax fleet installing the exhaust vessel cleaning systems.

“A year ago, people were forecasting this would be a huge disruption on the freight side, he told the third annual Mare forum in Geneva on Wednesday. “It doesn’t seem like it’s going to be. The part of the future that I do fear is on the fuel supply side.”

Supply, availability, along with the lack of any specifications for 0.5% fuel oil, raised compatibility and stability concerns that remained at the forefront of owners’ minds, the forum heard.

Shipowners feared being sold “cats and dogs” fuels, said Phoenix Shipping & Trading president George Gourdomichalis. He said a “Greek friend” who analysed contaminated fuel from Houston supplied to his vessel found “cats and dogs — it was amazing the additives that were found”.

Dry bulk owners are reeling from the lowest earnings in more than 30 years as an oversupply of ships amid stalling global trade growth depresses earnings. But SwissMarine — says 2020 will do little to advance rates. The Geneva-headquartered shipper controls more than 174 of the largest vessels, and ships 127m tonnes annually, ranging from iron ore and coal to minerals and grains.

Capesizes need to be removed for an additional week at dry docking to install the abatement technology, allowing them to continue using lower-priced 3.5% sulphur fuel oil instead of higher-cost marine fuels at the mandated 0.5% level. Twenty-two percent divided over 52 weeks amounted to less than 0.4% of the fleet affected, he said.

“Last year you would have been worried about losing 0.4% of the fleet but right now with all of the disruptions in Brazil, there’s much less cargo to carry, and the fleet is much less utilised than what it was. That disruption from installing those scrubbers is not the fear factor that it seemed to be a year ago.”

The fleet speed implications of slower steaming to conserve fuel and lower operating costs also won’t lift rates, Mr Tobin said.

SwissMarine examined the performance of more than 100 capesize vessels it has operataed over 10 years to extrapolate the impact on the entire fleet should the alternate marine gasoil be priced at $650 per tonne. This would slow the overall fleet by 0.4 knots, Mr Tobin said. This also applied to the panamax fleet, where “there would be no huge changes in speed”.

With 22% of the capesize fleet on scrubbers running on significantly cheaper fuel, they could speed up if they needed to. He said ships fitted with scrubbers would dominate longer routes. More crucial for charterers was to weigh up when to switch fuel tanks to higher-cost fuel ahead of the January 1 deadline. This was being well managed by larger charterers and operators, he said.

SwissMarine foresees a potential risk of supply chain problems and vessel queuing at smaller ports as ships switched from buying high-sulphur fuel to buying low-sulphur fuel, just before and after the deadline. Miners operating their own tonnage would switch early to be safe, Mr Tobin said.

“The smaller guys, the types of people we take capes from, those are the ones I’m worried about. Will they be ready? Will the fuel be ready?”