Take a seat, Nostradamus: I’ve got some news. To quote the rock band REM, it’s the end of the world as we know it.
Like the recent gatherings preceding it, speaker after speaker at the Platts 5th Annual Mediterranean Bunker Fuel Conference in Athens last week discussed the ifs, whats and hows of the impending little shipping apocalypse.
Ned Molloy, managing editor, fuel oil, discussed bunker prices while Alex Younevitch, managing editor, freight markets, delivered a rather droll presentation on the state of affairs in the bulk market.
Sameer Mohindru, senior editor, Asia shipping markets, wasn’t there, but the sonorous words in his recent Platts video kept ringing in my ears: “2020 will change the course of maritime history.” So too the venerable oracle of the bunker business, Adrian Tolson, who recently declared 2020 to be “the biggest thing to hit our industry since we switched from coal to fuel.” And they’re right: shift will happen in 2020.
And just as in previously-predicted apocalypses, armies of enterprising consultants bearing appropriately-furrowed brows are capitalizing on the rising tide of anxiety, divining many predictions from their briny crystal balls. Those old enough might recall all the professional prognosticators who made big bucks preparing us for another apocalypse: Y2K.
For the young ’uns among us, Y2K (meaning ‘Year 2000’) was the expectation that all computers worldwide would become confused and malfunction once their internal clocks ticked one second beyond 23:59:59 on Dec. 31, 1999.
A mass freak-out ensued among the world’s governments and many corporations, who proceeded to ply around half a trillion US dollars fixing their IT systems. An array of survivalists, millennialists and messianists eagerly awaited Armageddon with breathless anticipation.
But when the Year 2000 was one second old, computers kept on ticking.
Yet instead of mass relief, a substantial number of observers strangely concluded that the absence of a cataclysmic crash must have meant that Y2K was a gigantic hype or hoax and that the investment to prevent the supposed catastrophe was an utter waste of money. In retrospect the outrage over the waste seems more like sour grapes — disappointment that the world didn’t actually come to a crashing end.
Was the Y2K fear and investment justified? It was: while it was probably a lot more wasteful than it could have been, Y2K phobia was definitely warranted.
2020 is the shipping industry’s Y2K: lowering the marine fuel sulfur limit from 3.5% to 0.5% will be a big and costly affair.
As Sameer points out, it will touch all players up and down the shipping food chain: ship owners, operators, bunker traders, barge companies, refiners, ports, engine manufacturers, scrubber makers, shipyards, scrap yards and even banks and insurers — all will be affected for better or worse. We just don’t know exactly how. All we know is that (as the American President-elect might say) it’ll be huuuge.
Given our inability to discern any real details of how things will actually unfold in the not-too-distant future, the perfect vision implied by 2020 is just slightly ironic.
Yes, shift will happen — it always does. But beyond many extremely educated guesses, we simply have no idea what to expect, and therein lies the industry-wide worry. To quote the eminently quotable Donald Rumsfeld, former US secretary of defense: too many known unknowns. And those pesky unknown unknowns lurk right behind them.
But wait, there’s another apocalypse coming: impending ballast water regulations may have an impact on the industry rivaling that of 2020.
When a ship takes on cargo in, say, Singapore for delivery in Seattle, it also takes on water for ballast. And when this Singaporean water is dumped in Seattle, a whole menagerie of invasive species is released with it. This is a profoundly serious problem and the filtering equipment to be installed on 50,000 ships could cost $50 billion. Huuuge.
Thing is, it’s not like 2020 is some random black swan swimming in from the clear oceanic blue. The International Maritime Organization (IMO) regulations limiting sulfur levels in residual marine fuel were first formulated in 1997, implemented at an initial 4.5 % in 2005 and lowered to 3.5% in 2012. The 2020 deadline for the 0.5% limit was penciled in during 2005 — allowing the shipping industry a full 15 years to prepare.
I suppose that, ultimately, that’s just how we humans roll. Or shift.