Mixed compliance option decisions for container ships under global sulphur emission restrictions

This study investigates the mixed compliance option decisions of container shipping companies considering fuel switching and scrubber installation. It refines the net present value model incorporating various market and policy factors and simulates the effect of each factor on the net present profit. The results disclose the critical values of fuel price spread (30% higher), SECA distance ratio (6%), discount rate (4.1%) and scrubber installation cost (6.5% decrease). Keeping all other factors constant, when one factor surpasses its critical value, installing scrubbers is more beneficial, while it is more attractive to switching fuels when it is lower than the critical value. Since all the factors are volatile, shipping companies' compliance choices are mixed in practice to avoid potential risks. It then investigates the effect of company and ship characteristics on the scrubber installation using observed data. The Binary Logit regression reveals the different preferences of shipping companies considering different factors.

Automated summary

This study examines container shipping companies' decisions on compliance options, including fuel switching and scrubber installation. A refined net present value model is used, incorporating market and policy factors, to simulate the effect of each factor on net present profit. Results show critical values for fuel price spread (30% higher), SECA distance ratio (6%), discount rate (4.1%), and scrubber installation cost (6.5% decrease). Due to the volatility of these factors, shipping companies have mixed compliance choices to mitigate potential risks. The study also explores the influence of company and ship characteristics on scrubber installation using observed data, revealing different preferences among shipping companies considering different factors.