The container shipping industry has witnessed a significant surge in scrubber-fitted capacity, largely propelled by the extensive newbuilding program of Mediterranean Shipping Company (MSC). As of January, scrubber-fitted container capacity reached 10.3 Mteu, marking a substantial increase of 1.8 Mteu within a year, according to Alphaliner.
MSC’s preference for scrubber-fitted tonnage has played a pivotal role in this growth, with the Geneva-based carrier contributing over 890,000 teu of extra exhaust-fitted tonnage through a combination of newbuilding deliveries and second-hand purchases. Currently, 54% of MSC’s fleet is fitted with scrubbers, a notable rise from 46% recorded twelve months earlier.
This surge in scrubber-fitted capacity has propelled the overall proportion of the container fleet with fuel exhaust systems to a new high of 36.4%, up from 32.4% a year ago. The uptick coincides with an unrelated increase in the price premium between high and low sulfur fuel.
Other major carriers have also increased their scrubber-fitted tonnage during 2023. Ocean Network Express (ONE) witnessed the largest year-on-year percentage increase, rising from 24% to 33% of its fleet. Similarly, COSCO Group and Yang Ming increased their fleet proportion by 7% and 6% respectively.
However, Israel’s ZIM remains an outlier with just nine ships, totaling 70,000 teu, fitted with scrubbers, ranking it 16th globally in terms of scrubber capacity despite being a top-10 carrier. ZIM’s forthcoming newbuilding deliveries are primarily LNG-fueled, although it will charter 12 vessels that currently do not run on green fuel.
The recent improvement in the price delta between heavy and light fuel is advantageous for scrubber operators. The price difference between Rotterdam IFO 380 and VLSFO stood at nearly USD 110, marking a return to favorable levels for scrubber owners. This advantage is further accentuated by longer voyages undertaken around the Cape of Good Hope.
Estimates suggest that carriers can recoup the cost of a scrubber retrofit in approximately six years, even less for newbuildings, with the current price premium of Rotterdam VLSFO to HFO averaging USD 116 per ton in 2024.
Despite lower-than-expected sulfur price deltas initially deterring some carriers from fitting scrubbers, the recent increase is welcomed by scrubber proponents as attention shifts to cost-cutting amidst changes in the supply-demand equation. When regulations were introduced in 2020, scrubber take-up as a percentage of the fleet stood at approximately 11%.
Source: Alphaliner
