Assessing the implications of IMO 2020 on tanker vessels’ chartering and employability prospects with a focus on the installation of SOx Scrubbers

As from January 1, 2020 the limits, which were coined as IMO 2020, of sulphur in fuel oil used on board vessels operating outside emission control areas was reduced from 3.50% m/m (mass by mass) to 0.50% m/m. Those limits are set out in Annex VI of the International convention for the Prevention of Pollution from Ships (MARPOL) is an attempt by International Maritime Organization (IMO) to reduce sulphur oxide produced by ships. To be noted that in the designated emission control areas (the Baltic Sea are, the North Sea are, the North American are, and the United States Caribbean Sea area) the maximum sulphur limit is 0.10%. One of the ways of complying with the IMO 2020 limits is by installing an exhaust gas cleaning system (scrubber) – others being switching from high-sulphur fuel oil (HSFO) to marine gas oil (MGO) or distillates; using very low sulphur fuel oil (VLSFO) or compliant fuel blends; use of sulphur free fuels. The installation of a scrubber ensures use of HSFO without breaching the IMO 2020 limits. Considering the importance and necessity of complying with IMO’s regulations, this paper will assess the implications of IMO 2020 on tanker vessels’ chartering, by way of the charter party provisions ensuring compliance, as well as the implication on their employability prospects. Particular emphasis will be put on the installation of scrubbers and the emergence of two-tier (or multitier) chartering market for tanker vessels. Aim of this paper is to provide a concise, yet comprehensive, view on the topic.