Hyundai Global Service (HGS), the consultancy arm of Hyundai Heavy Industries (HHI), has secured scrubber retrofitting orders for more than 70 vessels, including 35 ships from Hyundai Merchant Marine (HMM) and 15 vessels from SK Shipping.
The unit was spun off from HHI in 2016 and is headed by its president, Chung Ki-sun, a third-generation member of the family that founded the Hyundai chaebol.
The International Maritime Organization’s global sulphur cap, which will come into effect in 2020, restricts sulphur content in marine fuels to 0.5% from the current limit of 1%. Shipowners can choose to install scrubbers, burn low-sulphur fuel oil, or use other fuels such as liquefied natural gas.
So far in 2018, HGS’s sales have reached KRW450 billion (USD395 million), more than doubling total sales in 2017, as more shipowners order scrubbers ahead of the sulphur cap.
HGS has been working with compatriot shipowner KSS Line to retrofit the latter’s fleet of chemical tankers and LPG carriers with scrubbers and has agreed to supply scrubbers manufactured by Clean Marine of Norway to HHI-built vessels.
Besides KSS Line, SK Shipping, and HMM, HGS has signed agreements to supply scrubbers to shipowners from Japan and Hong Kong, among others.
Classification society DNV GL estimates that in the past six months, at least 1,000 scrubbers have been ordered.
Chung anticipates growth in demand for maintenance, repair, and retrofitting and wants to use HGS’s operations to add value to HHI.
In 2017, the first year of HGS’s operations, turnover totalled KRW240.3 billion and operating profit of KRW56.4 billion was achieved. This year, revenue is estimated to be up by 87% to KRW450 billion.
Scrubbers remove sulphur from marine fuels as the bunkers are burned, but debate has surrounded their cost effectiveness.
In a recent interview with IHS Markit, chief executive officer of Anglo-Eastern Group Bjørn Højgaard cited weight and stability issues with scrubbers.
On 28 August, Hong Kong-based bulk carrier owner Jinhui Shipping & Transportation said it was opting to burn low-sulphur fuel oil as it was unsure of the effectiveness of scrubbers.
However, others, such as Vale and Ciner Ship Management, are moving ahead with retrofitting plans.