May 8, 2020ESGGeneral Business News

Three Steps for a Smooth Transition to IMO 2020: Preparation, Flexibility and Timing

During late 2019, the maritime industry was gearing up to IMO 2020. The logistical complexity and financial repercussions were going to be huge. While living and working through this step change, Hafnia Bunkers found that preparation, flexibility and timing were all essential for a smooth, efficient transition into this new reality.

 

The challenges of IMO 2020

Limiting the sulphur content of bunkers to 0.50% m/m is believed to have a positive effect on increasing worldwide sustainability and has therefore become a regulatory demand within the maritime industry. IMO 2020 also presented major logistical and financial challenges throughout the bunker industry. Vice President of Hafnia Bunkers, Peter M. Grünwaldt points out the bunker market is always in constant flux.

Whether it’s Coronavirus, bad weather in Gibraltar, or IMO 2020 regulations – it’s our job to be prepared to deliver on behalf of our members.”
Peter M. Grünwaldt, Vice President, Hafnia Bunkers.

 

 

 

Preparation is key

In order to prepare for the step change of IMO 2020 in the Maritime industry, Hafnia took the decision to establish its IMO 2020 Taskforce – consisting of the bunker department, technical personnel and people from the performance team. Its job was to prepare for the new regulations included changing procedures, cleaning and emptying vessels at the right time and buying new on-spec fuel from reliable suppliers.

 

Foresight and flexibility

Whereas container ships have schedules planned years in advance, the more complex bunker pattern for tramp vessels such as tankers depends on many factors: market movements, politics, weather conditions, regulations and basic supply and demand. All these factors have the ability constantly change any trading environment. In a shipping company like Hafnia This makes a bunker desk with a deep understanding of the market, and high degree of flexibility a necessity.

“We follow all markets and almost every port around the world daily. That knowledge enables us to directly affect the bottom line for our members.”
Peter M. Grünwaldt, Vice President, Hafnia Bunkers.

 

 

Knowing when to act

Nobody knew when the effects of IMO 2020 were going to break, but around November 2019, Grünwaldt’s bunker team started to detect the effect on the market. To the Hafnia team there were almost no surprises except for the ferocity with which the situation hit them. Contracts were in place; the plan was laid out and executed with the help of the entire company both on and offshore. When the market went into a frenzy new routes started to be used with customers demanding bunkers from parts of the world where there was little or no bunker presence. Even in places where suppliers had been preparing, their efforts were sometimes not enough. Such was the sheer scale of the transition. Many ship owners were not prepared for what ensued and it would end up costing them dearly.

 “2020 was a monumental shift in bunker history and we’re proud of the way we prepared for and handled it. The feedback internally and externally has been overwhelmingly positive, which we are extremely happy about.”
Peter M. Grünwaldt, Vice President, Hafnia Bunkers.

 

 

 

Working towards the solution

Grünwaldt and his team are dealing in over 200 different ports globally for the benefit of their partners. As part of their IMO 2020 analysis, the scrubber agenda is an issue they take very seriously. In 2018 Hafnia took the decision not to retrofit vessels with scrubbers due to their belief that HSFO would not be readily available in the ports their vessel call at. Secondly the environmental benefits of scrubbers were not apparent to the team, “we were not convinced on the environmental impact of discharging scrubber wash water back into the sea.” says Grunwaldt. The reservations regarding HSFO availability are as of this moment warranted and the price gap between HSFO and IMO 2020 fuels currently continues to narrow making retrofitting vessels with scrubbers less attractive. Furthermore, while the jury is out on the environmental impact of scrubbers, more and more ports have banned vessels with scrubbers entering certain areas. Forethought regarding this issue has proved invaluable.

For Hafnia Bunkers, the current business model is viewed as the most beneficial by its members. Forming alliances and pooling ship owners creates greater bargaining power, increased market transparency, and even streamlines business for suppliers too. 

“We want to grow and build the bunker desk in Copenhagen, Singapore and Houston to help other ship owners out there working with the new reality of IMO 2020, and to prepare for future challenges that undoubtedly lie ahead.”
Peter M. Grünwaldt, Vice President, Hafnia Bunkers

When navigating the market through issues such as sustainability, the world economy and the current coronavirus crisis, the only way to stay ahead is meticulous preparation, constant flexibility and a willingness to act when the right time comes.

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Peter Martin Grünwaldt
Head of Bunkers

M: +45 2040 0552T:  +45 3369 9141

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