Looming environmental regulations are pushing many shipowners to consider scrapping, according to a UBS survey.
The increasingly likely candidates for scrapping appear to be vessel 15 years or older as a result of new ballast water and emissions rules.
Based on an online survey of owners and other shipping executives, UBS analyst Spiro Dounis says about half of respondents expect to scrap vessels between 15 and 25 years old rather than spend on retrofits, including ballast treatment gear and sulphur scrubbers.
Dounis says tankers may see higher levels of scrapping due to the relative age of the fleet, with nearly one-quarter of the tanker fleet at 15 years old or older. Some 17% of the dry-bulk fleet has that age profile and 19% of the container fleet.
Scrubber option not popular
Ballast water rules are more pressing as the International Maritime Organization (IMO) has set a phased-in implementation starting this September. The respondents to the survey believe only about 30% of the world fleet is already compliant with the new rules.
The survey showed 65% of respondents plan to retrofit vessels for ballast water treatment regulations. Owners are expected to spend between $250,000 and $1m on those retrofits with the special survey itself costing about $750,000.
The phase-in of the IMO's rules for ships to emit no more than 0.5% sulphur, which are set to begin in 2020, is going to be implemented primarily through use of marine diesel fuel, with 74% of respondents expecting to use that fuel in place of high-sulphur fuel oil.
Scrubbers would allow ships to continue to burn high-sulphur bunkers, but only 19% of owners expect to install that technology, the investment banks survey showed.
The option to use LNG fuel, meanwhile, remains the least popular with only 5% of respondents expecting to use LNG.
