Scrubber Retrofit Bottlenecks
Potential bottlenecks in the scrubber retrofit industry have been discussed for many years, but few would have anticipated just how quickly these bottlenecks would appear. Between early Q2 and Q3 2018, the lead times for the scrubber units themselves multiplied in some cases by a factor of 3, from 6 months to 18 months, leaving many shipowners in panic.
Indeed, some of the larger scrubber manufacturers have already openly admitted that their limited build slots are being reserved for large fleet agreements only, leaving “smaller” shipowners out in the cold and forced to choose their second or third rate preference.
Retrofit engineering services are seldom discussed as being a bottleneck, but are also close to becoming a significant issue. A typical scrubber retrofit project does, after all, take around 12 weeks of engineering and draughting time to execute, and there are simply not enough capable, experienced and scalable engineering companies around to cope with the demand.
Even the ever-reliable and seemingly infinite Chinese shipyard capacity is coming under threat ahead of 1st January 2020, with reports of demand already exceeding capacity in many yards. There are even strong suggestions from many in the ship repair market that Chinese yards could quickly find themselves fully booked, across the country, for 2019.
And these are just the problems of today – the bottlenecks in the front end of the scrubber retrofit process. The industry, collectively, is yet to encounter the back end issues, such a; a significant lack of experienced installation supervision teams; a shortfall in manufacturer commissioning teams; a dearth of any substantive training programs; and of course, a lack of Class surveyors for sign off. Each of these is also likely to cause a huge bottleneck in the retrofit process further down the line.
The biggest worry in all of this, however, is the fact that thee major bottlenecks have been caused by a rush of orders during 2018 that totals just 3% of the global fleet. Orders of just 1000 scrubber systems have created widespread panic and have practically brought the scrubber retrofit industry to its knees – with more uncertainty to come.
ZERO SUM GAME
There can be little doubt that every vessel that is not made “scrubber ready” prior to 1st January 2020, increases the likelihood that the fuel price differential between HFO and MGO will increase. With scrubber take up currently estimated at 7% of the global fleet by 2020, the retrofit industry as a whole is realistically unable to cope with any further upturn in demand. It is what many shipowners are calling, a zero sum game. So how do owners deal with this uncertainty? Well Cleanship Solutions are firm believers in ensuring every problem is presented with a viable solution, and our solution here is simple. If you are an owner or operator even remotely considering scrubbers as a compliance method, engage an experienced compliance and retrofit partner, such as Cleanship, for advice as soon as possible. We can help manage the risks outlined in this article efficiently, and guide you through the compliance process seamlessly – even whilst you continue to consider the commercial aspects behind the scenes. We are, afterall, your trusted advocate in achieving environmental compliance.