INTERNATIONAL credit agency, Moody’s Investor Service, says complying with the International Maritime Organization’s 2020 emissions standards will weigh on shipping companies’ credit quality.

Moody’s has released a report, examining the costs of compliance and the various means of operating more cleanly.

“Shipping companies have options to meet the new, stricter emissions standards, effective January 2020, but all are costly with additional capital or higher operating costs,” Moody’s stated.


“The near-term need to comply with the IMO’s lower sulphur cap on marine fuels puts additional strain on an already stressed industry.”

Moody’s noted companies could buy more expensive, cleaner fuel that complies with emissions standards, or they could install costly exhaust gas clean systems (scrubbers) to cut emissions while continuing to burn cheaper fuel oil.

“We believe the most prudent strategy is a mix of both solutions given concerns about the supply of the cleaner fuel and higher costs associated with both cleaner fuels and scrubbers,” Moody’s stated.

“Companies’ strategies are still evolving,” it stated.

Angela Gillham from MIAL. Credit: MIAL

“Cleaner fuels are more expensive and supply may be limited, but cleaner fuel does not require costly vessel modifications.

“Purchasing cleaner fuel does not require retrofitting ships with expensive new equipment.”

Moody’s stated cleaner fuel was likely to be in short supply and more expensive than more widely used residual (bunker) fuel for some time.

Maritime Industry Australia deputy chief executive Angela Gillham said the Moody’s report presented “a concise analysis of the issue which highlights the pervasive uncertainty faced by the industry, and the undoubtedly far-reaching consequences of the 2020 sulphur cap”.

“I think the other important consideration, which the Moody’s analysis briefly touches on, is the interplay between the impact of the 2020 sulphur cap and the future regulation of GHG emissions,” Ms Gillham said.

“Will the increase in fuel price as a result of the sulphur cap provide the economic driver needed to accelerate the development of low to zero carbon fuels?”